Spending recovery continues through December
Economy-wide spending has continued to stage a modest recovery according to the latest Commonwealth Bank Business Sales Indicator (BSI). While the November retail trade figures from the Bureau of Statistics yielded a disappointing result, the BSI suggests that spending picked up by 0.2 per cent in trend terms in December.
This follows on from a 0.3 per cent rise in November.
On a seasonally-adjusted basis, however, the BSI lifted by 0.5 per cent in December after a scant 0.1 per cent rise in November and 0.2 per cent growth in October.
Business activity has increased for four consecutive months, and there are signs that consumers are cautiously spending.
Only four out of 20 industry sectors contracted in trend terms in December, down from five sectors in October.
CommSec economist Savanth Sebastian said the latest results are positive, especially given that all states and territories and the majority of sectors recorded a healthy increase in sales.
He noted that while the cut in fixed and variable rates have prompted the pick-up in activity, the figures were off a low base and more rate cuts would be required to stimulate a widespread recovery.
“Despite the improvement that has taken place far greater levels of confidence will be required before we see a more notable pick-up in sales across all levels of the economy. As such it is likely that the Reserve Bank will need to cut interest rates once again in an attempt to support the economy,” he said.
The Commonwealth Bank BSI revealed that sales have now expanded for five consecutive months, marking the best run of gains since late 2009.
While the main monthly indicator of spending in the economy is the Australian Bureau of Statistics’ (ABS) Retail Trade release, the CBA’s statistics cover just spending at retail establishments, and exclude spending at a raft of other businesses.
However the BSI – obtained by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities throughout country – has had a reasonable record in tracking the direction of movements in the Australian Bureau of Statistics retail trade series over the past year.
- Categories
- Banking
- Tags:
- Commonwealth Bank Business Sales Indicator, CommSec, Savanth Sebastia
- Author:
- AB+F Online, mdavis@financialpublications.com.au
- Article Posted:
- January 20, 2012
Review this content
Fields marked with an asterisk (
) are mandatory.