Finally – some signs of life for retail. The latest data from the Commonwealth Bank shows consumer spending has risen as much as 10% in June, even though confidence remains fragile during the onset of the carbon tax.
And there’s some hope on the ASX, too, after fashion retailer Noni B announced it expects a profit of between $2.5 million and $2.6 million – up from the $200,000 it reported in 2011. Sales also increased by 2% to $119.7 million in the past year.
According to the BSI, which measures the value of credit and debit card transactions processed through Commonwealth Bank point of sale terminals, spending is up 10.1% from the same time last year, seasonally adjusted.
It is the sixth increase in the past eight months, and comes after a 2.1% increase in May. CommSec chief economist Craig James said the survey shows consumers are beginning to spend again – especially after the Reserve Bank cut rates back-to-back and the Federal Government provided more stimulus to families.
“The improvement in household budgets has enticed consumers to spend more freely, and businesses across an array of sectors have benefitted,” he said.
“As we’ve seen in past reports, we know the volatility experienced overseas is impacting on the confidence of consumers and their willingness to spend. However, spending has increased significantly in the past year, and we have now experienced 11 consecutive months of sales growth in trend terms.”
The strongest increase was in services, up 8.1%, followed by business services, up 3.1%. Wholesale distributors and manufacturers were up 2.9%, while mail order and telephone providers were up 2.8%.
In annual terms, only two sectors contracted – with hotels and motels the weakest sector, down 4.9%.
But spending has remained strongest in services, up 29.1%, wholesale distributors and manufacturers, up 27.4%, mail order and telephone order providers, 21.6%, and amusement and entertainment, 18.2%. Retail stores and clothing stores are also up 16% and 11% respectively.
On a state basis, the BSI has risen for 12 consecutive months in Queensland and for 11 months in South Australia, New South Wales, Western Australia and Victoria – no states dropped in June. The strongest result was in the ACT, up 2.1%, followed by South Australia and Western Australia, up 1.2% each.
Noni B is a sign of this strength. The company yesterday said its improvements in customer service have assisted in the announcement it will turn a larger profit.
“We continue to invest in training our sales team in customer service, combined with our great product, loyal customers, and expense and inventory management, this has helped our performance during what continues to be a challenging retail environment,” said joint managing director David Kindl.