Growth slows despite spending rise
(22 May 2012 – Australia) The latest Commonwealth Bank Business Sales Indicator (BSI) shows a slowing in growth despite economy-wide spending continuing to rise.
The BSI rose by 0.5 percent in trend terms in April, following a 0.6 percent gain in March and 0.8 percent increase in February.
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, a sample of approximately 30 percent of the Australian market.
Commonwealth Bank of Australia (CBA) Local Business Banking executive general manager Matt Comyn said despite what looked to be a longer-term recovery for business sales, the latest figures revealed that the story was not as positive as first hoped.
"Although things had looked promising, clearly the fragility we have witnessed in consumer confidence is still playing an active role in constraining the level of spending flowing through to businesses," said Comyn.
"This has resulted in economy-wide spending growing at the slowest pace in seven months. However, the recent rate reduction by the Reserve Bank, coupled with more favourable jobs data, may assist in lifting consumer confidence and sentiment over the next few months and act as an instigator for additional spending."
"It remains to be seen whether or not these developments will create enough of a flow-on effect to boost spending and whether this will assist in closing down the disparity in performance amongst sectors, something which has been more prominent in the April data."
Six of the industry sectors fell in April, up from five in March and four in February. The strongest monthly trend increase in sales occurred in the Amusement & Entertainment sector (up 2.3 percent), followed by Wholesale Distributors & Manufacturers sector (up 2.2 percent), Contracted Services (up 1.2 percent), Mail Order & Telephone Order Providers (up 1.0 percent) and Utilities (up by 0.8 percent). Amusement & Entertainment remains the strongest performer in annual terms, to be 22.6 percent higher than one year ago.
Amongst the weakest sectors in April was Hotels & Motels, down by 0.3 percent, and the tenth straight decline. Business Services also fell in April for the fifth straight month, down by 0.1 percent.
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, a sample of approximately 30 percent of the Australian market.
Commonwealth Bank of Australia (CBA) Local Business Banking executive general manager Matt Comyn said despite what looked to be a longer-term recovery for business sales, the latest figures revealed that the story was not as positive as first hoped.
"Although things had looked promising, clearly the fragility we have witnessed in consumer confidence is still playing an active role in constraining the level of spending flowing through to businesses," said Comyn.
"This has resulted in economy-wide spending growing at the slowest pace in seven months. However, the recent rate reduction by the Reserve Bank, coupled with more favourable jobs data, may assist in lifting consumer confidence and sentiment over the next few months and act as an instigator for additional spending."
"It remains to be seen whether or not these developments will create enough of a flow-on effect to boost spending and whether this will assist in closing down the disparity in performance amongst sectors, something which has been more prominent in the April data."
Six of the industry sectors fell in April, up from five in March and four in February. The strongest monthly trend increase in sales occurred in the Amusement & Entertainment sector (up 2.3 percent), followed by Wholesale Distributors & Manufacturers sector (up 2.2 percent), Contracted Services (up 1.2 percent), Mail Order & Telephone Order Providers (up 1.0 percent) and Utilities (up by 0.8 percent). Amusement & Entertainment remains the strongest performer in annual terms, to be 22.6 percent higher than one year ago.
Amongst the weakest sectors in April was Hotels & Motels, down by 0.3 percent, and the tenth straight decline. Business Services also fell in April for the fifth straight month, down by 0.1 percent.
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