Australia-wide spending is increasing at the fastest rate in seven and a half years, according to the latest Commonwealth Bank Business Sales Indicator (BSI) released today.
The monthly report, tracking the value of credit and debit card transactions at the point of sale and an important real time indicator of the state of the economy, showed a rise of 1.2 per cent in November after an upwardly revised 1.1 per cent lift in October.
The result demonstrates the continued bounce back of nation-wide spending after uncertainty around Brexit and the US and Federal elections, as well as subdued sales throughout early 2016.
“Growth in spending is a great sign that the recent slide in GDP figures is going to be a minor blip on the radar,” said CommSec Senior Economist, Savanth Sebastian.
“The Australian economy is in good shape, consumers are confident, and the outlook for 2017 remains bright. It’s unlikely that we will be heading for a second GDP dip and a technical recession.”
The more volatile seasonally adjusted BSI rose by 2.8 per cent in November after falling by 0.4 per cent in October.
“The Christmas period is upon us and there are signs that retail spending has lifted in the last few weeks – a positive sign for Australian businesses leading into the New Year,” said Sebastian.
Industry analysis
Spending rose across 16 or the 19 sectors analysed in November, with Government Services and Amusement and Entertainment sectors seeing the strongest gains.
Government Services saw spending rise 4.5 per cent in trend terms for November after lifting more than 4 per cent in both October and September. Amusement and Entertainment was up 3.6 per cent in November – following a similar rise the previous two months.
The strongest annual growth was seen in Government Services (up 23.1 per cent), Amusement and Entertainment (up 19.3 per cent), Wholesale Distributors & Manufacturers (up 14.3 per cent) and Hotels & Motels (up 13.6 per cent).
Transportation suffered its seventh straight decline, down 0.2 per cent in November. Spending fell most at Mail Order and Telephone Order Providers, down 1.1 per cent in November and the third straight decline.
State by state breakdown
Sales rose in all states and territories during November, with New South Wales and the Australian Capital Territory leading in spending growth.
For November, New South Wales was up 1.8 per cent followed by the ACT (up 1.4 per cent), Northern Territory and Queensland (up 1 per cent), Western Australia (up 0.9 per cent), South Australia (up 0.8 per cent), Victoria (up 0.7 per cent) and Tasmania (up 0.4 per cent).
Strongest annual growth was in South Australia (up 9.3 per cent), from NSW (up 8.4 per cent), ACT (up 8.1 per cent), Western Australia (up 7.7 per cent), Queensland (up 6.9 per cent), Northern Territory (up 4.9 per cent), Tasmania (up 3.6 per cent) and Victoria (up 1.2 per cent).
The BSI is a key measure of economy-wide spending, tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals.
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 by applying a statistical program.
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 (MCC) categories. MCC is a four-digit number assigned to a business when the business first starts accepting cards as a form of payment.