Retail sales rose 0.6% in January: Business Sales Indicator
Australian retail spending rose by 0.6% in trend terms in January, according to the Commonwealth Bank Business Sales Indicator, after 0.7% gains in November and December.
The BSI, which tracks the value of credit and debit card transactions processed through CBA’s point-of-sale terminals, recorded rises in spending in all states for the fourth consecutive month.
“The strength in business sales is apparent at both the sector and state and territory level,” CommSec chief economist Craig James says.
“In January, there were only four sectors recording negative growth and – for the fourth straight month – all of the eight states and territories recorded higher sales in trend terms.”
Clothing stores recorded the strongest spending growth, up by 2.3%, followed by mail order/telephone order providers and retail stores, both up 2%.
According to James, the recovery in economy-wide spending means the Reserve Bank has “received some validation” for its decision not to cut interest rates this month.
“Despite ongoing economic concerns being felt both here and overseas, sales figures are ticking up and have been for some time now,” James says.
“That means that there is still a certain level of confidence amongst consumers – even if it is relatively weak – which is translating into spending activity.”
“While the improvements are a good sign, there are a range of factors that contribute to consumer confidence.”
“The ongoing fluctuations we are seeing in the global economy therefore make it difficult to forecast how strong the recovery will be.”
The weakest sector in January was hotels and motels (down 1.3%) followed by service providers (down 0.7%), utilities (down 0.3%) and businesses services (down 0.2%).
The retail sector may have experienced an increase in sales in January but, in annual terms, retail stores were the weakest sector, down by 8.2% on a year earlier, followed by hotels and motels.
At the other end of the scale, spending was strongest at mail order/telephone order providers (up 22.4%) followed by amusement and entertainment, clothing stores, and contracted services.
With regard to the states, the strongest result was in the ACT (up 1.6%), followed by South Australia (up 1%), WA, the Northern Territory, Tasmania, Queensland, Victoria and NSW.
According to James, the RBA believes that people are still spending but that traditional retailers are receiving a smaller share of the consumer dollar.
“The latest CBA Business Sales Indicator tends to support [this] view. The Reserve Bank may decide to stay on the interest rate sidelines a little longer,” James says.