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Sales growth outlook encouraging – BSI

Sales growth outlook encouraging – BSI

(24 August 2015 – Australia) Seasonally adjusted economy-wide spending rose 1.2 percent in July, the fastest growth in four months, according to the Commonwealth Bank Business Sales Indicator (BSI).

In trend terms economy wide spending was up 0.6 percent in July which is a good sign for retailers.

CBA said while monthly trend spending eased, annual growth remained firm, with sales up 7.7 percent in July – well above the decade-average of 5.3 percent.

The seasonally adjusted measure of sales also rose 1.2 per cent in July, the fastest growth rate in four months, to be up 7.4 percent over the year.

Craig James, chief economist at CommSec and author of the BSI report, said that despite the slightly slower sales growth experienced in July, the outlook was encouraging.

“Spending is still growing at an above-average pace, consumer confidence is also above short and longer-term averages and the outlook for the job market has improved.

“The Reserve Bank recently stated that the unemployment rate has probably peaked.”

Claire Roberts, executive general manager, Local Business Banking, at CBA said: “The BSI shows we’re still experiencing strong year-on-year sales growth, despite tougher global economic conditions.

“As the rate of growth is beginning to slow and consumer confidence is measured, it’s an important time for businesses to ensure they have strategies in place to manage any further fluctuations over the coming months.”

At an industry level, sectors which experienced the strongest growth in July were Clothing Stores (up 1.8 percent) and Automobiles & Vehicles (up 1.5 percent). And Clothing Stores experienced the fastest spending growth in over six years.

The Business Services sector continued to post its highest monthly growth rates in 18 months, rising 0.8 percent in July following a 1.4 percent boost in both April and May and 1.1 percent lift in June.

Across all sectors, spending fell in just three of the 19 industry sectors measured in trend terms in July.

These included Airlines (down 3.7 percent); Mail Order/Telephone Order Providers (down 6.0 percent) and Professional Services & Membership Organisations (down 0.8 percent).

In annual terms, sectors to record the strongest growth included: Hotels & Motels; Miscellaneous Stores; Personal Service Providers; Amusement & Entertainment; and Wholesale Distributors & Manufacturers.

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.

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