Business sales are continuing to grow, according to the Commonwealth Bank Business Sales Indicator, but an expert says consumers are still “easily spooked” by negative economic news.
The BSI rose by 0.7% in trend terms in February, following 0.9% gains in December and January. Only three industry sectors fell in February, while two others remained broadly flat.
The BSI tracks the value of credit and debit card transactions processed through CBA point-of-sale terminals, representing approximately 30% of the Australian market.
Wholesale distributors and manufacturers recorded the strongest gain in February (up 1.7%), followed by clothing stores, retail stores and contracted services (all up 1.3%).
The amusement and entertainment sector also experienced a 1.1% increase.
In contrast, the weakest sector in February was hotels and motels (down 1%) followed by mail order and telephone order providers, and business services (both down 0.3%).
Notably, it was the first decline in sales for mail order and telephone order providers after 12 months of gains. Meanwhile, spending at miscellaneous stores has remained flat for two months after five months of gains.
On a state by state basis, none of the states and territories recorded weaker sales in trend terms for the fifth consecutive month, although the BSI for WA was largely – and surprisingly – flat.
The ACT and South Australia recorded the strongest results (both up 1.1%), followed by the Northern Territory (up 0.8%), and Queensland and Victoria (both up 0.7%).
The trend BSI for the Northern Territory has now risen for eight consecutive months, but the growth pace has eased over the past two months.
All other states and territories have recorded stronger trend spending growth for seven straight months, except for the ACT (up for five months) and WA (flat after six monthly gains).
Matt Comyn, CBA executive general manager of local business banking, says despite a modest slowdown in the growth rate, the continued positive results will be welcomed by businesses.
“The figures demonstrate that the recovery is gathering momentum and the willingness to spend is becoming more defined every month,” Comyn says.
“Consumers are showing resilience against the uncertainty we have been experiencing in domestic and global markets.”
“Although their spending habits are still relatively meek by pre-GFC standards, the intention to continue spending is there and that bodes well for the economy.”
However, Comyn says businesses need to remember that confidence overall is still shaky, so they need to remain active in their quest to attract consumers.
“Consumers are spooked easily and that means that any significant negative economic news has the ability to change things very quickly,” he says.