Commonwealth Bank Business Sales Index
- Economy-wide spending is growing at the fastest rate in nine months according to the Commonwealth Bank Business Sales Indicator (BSI). The BSI, a measure of economy-wide spending, rose by 0.5 per cent in February after a similar lift in January. Spending growth remains above the 0.4 per cent long-term average monthly growth pace.
- The annual trend sales growth eased from 5.1 per cent to a 14-month low of 5.0 per cent in February, below the 5.5 per cent long-term average growth pace.
- The more volatile seasonally-adjusted measure of the BSI rose by 0.6 per cent in February, the eighth gain in 10 months.
- At a sectoral level, 13 of 19 industry sectors rose in trend terms in February, down from 14 sectors in January.
- Spending rose across all states and territories in February except Northern Territory.
- The Commonwealth Bank BSI is obtained by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities. The BSI covers spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines.
What does it all mean?
- Spending continues to lift across the economy at a faster pace than the long-term average. Travel-related spending remains healthy, perhaps reflecting a weaker Aussie dollar, lower petrol prices and a drop in airfares. The strength in domestic travel remains a positive driver for tourist regions.
- Business and government are restraining spending while consumers are cutting back on big-ticket purchases like cars.
What does the data show?
- The Commonwealth Bank Business Sales Indicator (BSI) – a measure of economy-wide spending – rose by 0.5 per cent in trend terms in February after a similar rise in January. Economy-wide sales have now consistently lifted each month for over two years.
- The growth pace started lifting in March 2017 and over the period from October 2017 to January 2018 the BSI consistently recorded monthly gains of between 0.7-0.9 per cent a month. Growth in sales has held between 0.3-0.6 per cent a month for the past 13 months, picking up pace over December and January. Current growth is slightly above the long-term average pace of 0.4 per cent.
- The annual trend sales growth eased from 5.1 per cent to a 14-month low of 5.0 per cent in February, below the 5.5 per cent long-term average growth pace.
- The more volatile seasonally-adjusted measure of the BSI rose by 0.6 per cent in February, the eighth gain in 10 months.
- The Commonwealth Bank BSI is obtained by tracking the value of credit and debit card transactions processed through the Commonwealth Bank merchant facilities. And in line with the practice of the Bureau of Statistics with retail trade data, seasonally adjusted and trend estimates of the BSI are obtained by applying statistical software. The seasonally adjusted and trend BSI results permit analysis of the broader underlying trends that may be hidden in the raw data.
- Across sectors, 13 of the 19 industry sectors rose in trend terms in February. Amongst the biggest gains in sales were Retail Stores (up 2.5 per cent); Transportation (up 2.0 per cent); and Airlines (up 1.7 per cent).
- Sales fell most in Mail Order/Telephone Order Providers (down 1.2 per cent); Automobiles & Vehicles and Business Services (both down by 0.3 per cent); and Government Services (down by 0.2 per cent).
- Airlines posted the strongest gain in sales in 19 months in February. In contrast, Government Services sales have now fallen for eight straight months.
- In annual terms in February, all but four of the 19 industry sectors recorded gains. Spending fell by 3.8 per cent over the past year in Government Services with Automobile/Vehicle Rentals down 2.3 per cent; Clothing down 1.4 per cent; and Automobiles & Vehicles down 1.1 per cent.
- At the other end of the scale, sectors with strongest annual growth in February included Retail Stores, Transportation, Airlines and Hotels & Motels.
- Sales were stronger across all states and territories in February except Northern Territory (down 0.3 per cent). The strongest growth occurred in Western Australia (up 1.0 per cent) followed by NSW (up 0.7 per cent); Tasmania (up 0.5 per cent); ACT and South Australia (both up 0.4 per cent); Victoria (up 0.3 per cent) and Queensland (up 0.1 per cent).
- In annual terms all states and territories had sales above a year ago except Northern Territory (down 4.2 per cent). The strongest growth was in Western Australia (up 8.1 per cent) from Tasmania (up 6.6 per cent). Slowest growth was in South Australia (up 3.2 per cent).
What is the importance of the report?
- The Commonwealth Bank releases its Business Sales Index (BSI) around the 20th each month. The data provides a broader perspective of consumer spending. The BSI includes transactions made at traditional retail establishments such as supermarkets, clothing stores and cafes & restaurants. But it is more comparable to the ABS Household Final Consumption Expenditure released on a quarterly basis. The Business Sales Indicator also covers businesses such as airlines, car dealers and utilities such as water and electricity companies as well as motels, business, professional and government services and wholesalers.
What are the implications for interest rates and investors?
- As long as jobs are created and job security remains strong then Aussie consumers will spend. And the extra dollars should flow through to business and support business-to-business spending as well as employment. The job market is crucial to the outlook for interest rates.
- CommSec continues to expect stable interest rate settings for the foreseeable future.
Craig James, Chief Economist
