The recent optimism about consumer spending has been labeled a “mirage” by a leading economist, with the latest Commonwealth Bank Business Sales Indicator falling by 0.3%.
The Business Sales Indicator is obtained by tracking the value of credit and debit card transactions processed through CBA merchant facilities.
The BSI fell 0.3% in June after posting modest gains earlier in the year. While only four out of 20 industry sectors contracted in June, CBA economist Craig James says the outlook doesn’t look particularly promising.
“The recent optimism about consumer spending has turned out to be a mirage. There are still few signs that Aussie consumers are ready to open their wallets and start spending again,” James says.
Spending at retail stores fell 0.9% in June, the BSI reveals.
This result comes on the back of the latest ING Financial Wellbeing Index, which shows Australian consumers are becoming more determined than ever to save rather than indulge in retail therapy.
The survey found 25% of respondents are saving more than a year ago, while 34% are maintaining their savings. But that’s not to say consumers have stopped spending altogether.
The BSI reveals the strongest lift in spending in June was by amusement and entertainment, which includes movie theatres, bowling alleys, golf courses and video stores. This category was up by 1.3%.
Following on from this were clothing stores, up 1.1%, and contracted services (0.7%), which include building trades as well as veterinary services. Spending was also up 0.5% in the transportation, hotels and motels, and personal service sectors.
In annual terms, five industries contracted in June, with automobiles and vehicles identified as the weakest sector.
At the other end of the scale, spending at contracted services was strongest, up 14.5%, followed by amusement and entertainment, and professional services and membership organisations.
With regard to the states, NSW recorded the weakest result, down 1.5%, followed by South Australia, Queensland and Victoria, all down by less than 1%.
Of the other states and territories, the ACT was the strongest, up 1.3%, followed by WA and the Northern Territory, both up 0.1%. Spending in Tasmania was largely unchanged in trend terms in June.
“The ACT has shown consistent growth over the past nine months,” James says.
“In contrast, sales in South Australia have softened over the past 18 months while spending growth in both [the] Northern Territory and Western Australia has improved over the past five months.”
“In annual terms, only the ACT is recording growth [of 6.8%], with Tasmania next best and Western Australia.”