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Media Release

Economy-wide spending bounces back

Spending bounces back

The Commonwealth Bank BSI has registered its biggest increase in nine months.

The latest Commonwealth Bank Business Sales Indicator (BSI) has recorded a 0.6 per cent increase in trend terms for August, its strongest gain in nine months. 

“Economy-wide spending has strengthened off the back of improving business and consumer confidence, low unemployment and on-going low interest rates,” CommSec Chief Economist Craig James said. 

“The pre-conditions remain in place for firmer spending in the lead-up to Christmas.” 

The 0.6 per cent increase in August is a large jump from the mostly flat spending growth over the year so far, and is slightly above the monthly average growth of 0.5 per cent for 2015. Annual sales growth also lifted to 4.6 per cent in August, up from 4.4 per cent in July. 

The more volatile seasonally adjusted BSI lifted by 1.1 per cent in August after falling by 0.7 per cent in July, continuing its zig-zag pattern for the year. 

At a sectoral level, 13 of the 19 industry sectors expanded in trend terms in August, a similar result to July, and sales rose in six of the eight states and territories. 

Mr James said spending has rebounded now the uncertainties surrounding the ‘Brexit’ vote in the UK and the Federal Election have been resolved.

Industry analysis

Spending by Government Services rebounded strongly with an increase of  2.1 per cent after falling from March through to June, though spending continued to fall in Business Services (down 1 per cent).

In annual terms in August, only three of the 19 industry sectors contracted: Airlines, Transportation and Automobiles & Vehicles.

Sectors with the strongest annual growth in August included: Wholesale Distributors & Manufacturers (up 14 per cent), Hotels & Motels (up 12 per cent) and Mail Order/Telephone Order Providers (up 11.4 per cent).

State-by-state analysis

Across states and territories sales fell only in the ACT (down 0.8 per cent) and the Northern Territory (down less than 0.1 per cent) in August. 

The strongest sales growth occurred in Queensland and Victoria (both up 0.9 per cent), followed by South Australia (up 0.8 per cent), NSW (up 0.5 per cent), Western Australia (up 0.3 per cent) and Tasmania (up 0.2 per cent).

In annual terms, all states and territories have sales above a year ago. The strongest growth was in South Australia (up 7.8 per cent), followed by Tasmania (up 6.5 per cent), NSW (up 6.3 per cent), Queensland (up 5.5 per cent), Northern Territory (up 5.4 per cent), Western Australia (up 5.5 per cent), ACT (up 4.7 per cent) and Victoria (up 0.4 per cent).

Find out more about the latest Commonwealth Bank Business Sales Indicator

About the Commonwealth Bank Business Sales Indicator

The Commonwealth Bank Business Sales Indicator (BSI) is calculated by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities throughout Australia. 

The BSI has been devised to provide a monthly assessment of spending trends in the Australian economy (covering 19 industry sectors and all Australian states and territories) and is available to the public on the Bank’s website and to the media on or around the 20th day of each month.

Credit and debit card transactions can be volatile on a month-to-month basis, affected by seasonal and irregular factors. The BSI is tracked in seasonally adjusted and trend terms. The overall BSI is measured in both seasonally adjusted and trend terms while state/territory and industry data are measured using the less volatile ‘trend’ approach. The seasonally adjusted and trend estimates of the BSI results are derived via the SEASABS statistical program from the Australian Bureau of Statistics.

The monthly BSI has been devised to provide a more timely assessment of spending trends in the economy. The main monthly indicator of spending in the economy is the Australian Bureau of Statistics’ (ABS) Retail Trade release. However these statistics only cover spending at retail establishments, and exclude spending at a raft of other businesses. 

The BSI includes transactions made at traditional retail establishments such as supermarkets, clothing stores, cafes and restaurants and as such is more comparable to the ABS Household Final Consumption Expenditure, which is released on a quarterly basis. The BSI also covers businesses such as airlines, car dealers and utilities, such as water and electricity companies, as well as motels, business, professional and government services and wholesalers. 

The BSI includes industry sectors based on the International Merchant Category Code (IMCC) categories. MCC is a four-digit number assigned to a business when the business first starts accepting cards as a form of payment.