Economy-wide spending fell almost 2% in December, according to the latest Commonwealth Bank Business Sales Indicator, despite small businesses’ hopes for a buoyant Christmas shopping season.
The BSI, which tracks the value of credit and debit card transactions processed through CBA point-of-sale terminals, fell by 1.9% in seasonally adjusted terms last month, following a 2.4% rise in November.
Of the 20 industries tracked in the BSI, spending was strongest in transportation, up 1.8% in trend terms.
Meanwhile, 12 industry sectors contracted in December, including service providers (down 3.6%), hotels and motels (down 1%) and automotive/vehicle rentals (down 0.9%).
But in annual terms, only four sectors contracted last month, including the three aforementioned sectors.
At the other end of the scale, spending was notably higher at wholesale distributors and manufacturers (up by 18.2%), retail stores (up 7.4%) and automobiles and vehicles (up 6.2%).
Looking at the states, sales rose most in Victoria and the ACT (both up 0.5%), followed by NSW (up 0.4%), Queensland (up 0.3%) and Tasmania (up 0.1%).
The trend BSI has now risen for 18 straight months in Queensland, 14 straight months in the ACT and nine straight months in Tasmania.
Only two of the states and territories recorded weaker sales in trend terms in December – the Northern Territory and South Australia, both down 0.3% – while sales were flat in WA.
In annual terms, no state or territory had sales below a year ago. The strongest growth was posted in South Australia (up 10.6%), followed by the ACT (up 10.5%).
Lex Thornton, CBA general manager of local business banking, says the results will come as a disappointment to many small businesses.
“We know that many small businesses across the country were hoping for a buoyant festive season,” Thornton says.
“While we saw a lift in spending in November, unfortunately the BSI showed that sales softened throughout December.
“If consumers remain prudent, it is unlikely that we will see any consistent or significant spending trends form in the near future.
“It is important that businesses make sure they have solid processes and plans in place to navigate future volatility.”
The BSI comes on the back of findings from the Australian Chamber of Commerce & Industry, which surveyed 595 people for its January 2013 ACCI Survey of Investor Confidence.
While the respondents were mainly from the construction and manufacturing industries, the results highlight the level of trepidation within the business sector generally.
For example, the index of Expected Number of Fulltime Employees fell to a 15-year low in December, suggesting business hiring intentions over the first half of 2013 remain weak.
It’s worth noting all indicators – with the exception of the Expected Unemployment Rate – were below their five-year averages over the quarter.
“Businesses consider more needs to be done to lift business confidence in 2013, including further rate relief,” ACCI chief economist Greg Evans said in a statement.
“Intrusive regulation and business taxes are also weighing heavily on the investment outlook.”