Annual spending up 10% but businesses told not to lose focus
Spending is up more than 10% on a year ago, according to the Commonwealth Bank Business Sales Indicator, which shows Queensland has marked its 12th straight month of trend BSI gains.
The BSI is calculated by tracking the value of credit and debit card transactions processed through CBA merchant facilities throughout Australia.
The latest BSI shows economy-wide spending posted solid growth in June, lifting by 2.5% in seasonally adjusted terms, following on from a 2.1% increase in May.
Encouragingly, spending is up 10.1% on a year ago – the biggest annual gain in more than four years.
Matt Comyn, CBA’s executive general manager of local business banking, says businesses should welcome the results.
“What these results tell us is that consumers are taking tentative steps in the right direction,” he says.
“Small surges in consumer sentiment can result in spending increases, which is what we have seen throughout the year, and again in the June results.”
However, Comyn is quick to point out consumer confidence still remains fragile. This coupled with a competitive landscape means businesses should “remain focused on moving forward”.
Two industry sectors fell in June, while the strongest monthly trend increase in sales occurred in the service providers sector (up 8.1%), followed by businesses services (up 3.1%).
In annual terms, two of the 20 industry sectors contracted in June, a similar result to May. The weakest sector was hotels and motels, down 4.9%.
At the other end of the scale, spending was strongest at service providers (up 29.1%) followed by wholesale distributors and manufacturers, and mail order/telephone order providers.
Amusement and entertainment also recorded an increase (up 18.2%), as did retail stores (up 16%) and clothing stores (up 11%).
With regard to the states, the trend BSI has now risen for 12 consecutive months in Queensland, and for 11 consecutive months in South Australia, NSW, WA and Victoria.
None of the states and territories recorded weaker sales in trend terms in June. The strongest result was in the ACT (up 2.1%), followed by South Australia and WA (both up 1.2%).
They were followed Queensland (up 0.9%), the Northern Territory (up 0.7%), Victoria (up 0.6%), NSW (up 0.5%), and Tasmania (up 0.1%).
In annual terms, no state or territory had sales below a year ago. The strongest growth was posted in South Australia (up 14.7%), followed by the ACT, Queensland and WA.
After 22 months of declines, sales in NSW have now risen in annual terms for the past three months.
The findings come on the back of ANZ’s Small Business Sales Trends report, which shows small business sales rose by 2.8% year on year in June and by 3% over the year to the June quarter.
The report uses data from credit, debit and Eftpos transactions processed through ANZ merchant systems.
The latest report shows sales growth across regional and rural areas continues to outstrip sales in the metro areas, with sales up 4.1% year on year compared with 2.1% year on year.
Not surprisingly, the mining states continue to report robust small business sales, while sales in South Australia, Tasmania and the ACT remain much weaker.
“Reports from our staff serving regional small business customers also confirm that sales in those rural areas are fairing well,” says Nick Reade, ANZ general manager of small business.
“Strong sales in regional areas [are] likely to be linked to the growth in the mining states.”