SPENDING BUILDS IN 2013-14 FINANCIAL YEAR

Spending across the economy increased by 9.8 per cent in the 2013-14 financial year, according to the Commonwealth Bank’s latest Business Sales Indicator (BSI).

The BSI is a key measure of economy-wide spending, tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals. The latest monthly BSI data showed that economy-wide spending slowed in June, with sales increasing 0.3 per cent in trend terms, down from 0.5 per cent in May.

The June index confirms a downward trend in the pace of sales, with six of the past seven months showing slower growth. The more volatile seasonally adjusted figures for June reveal that spending fell 0.4 per cent, after gaining 0.2 per cent in May.

Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank, said while the June BSI reported slower monthly growth, the annual 2013-14 BSI figures paints a more positive picture of growth.

“This is an improvement on the growth we saw in the 2012-13 financial year, reflecting improved economic conditions in the second half of 2013 and early 2014,” said Mr Bennett.

“However, conditions in particular industries and regions remain challenging, so it’s essential that businesses start the new year with a plan to maximise business performance and protect against periods of lower sales.”

Craig James, Chief Economist at the bank’s broking subsidiary CommSec and author of the BSI report, said the low interest rate environment provides a stable platform for spending growth in the coming year.

“Recent comments from the Reserve Bank confirm CommSec’s view that interest rates will remain at their current level until late 2014. The Reserve Bank also believes the Aussie dollar will ease at some point. If this did occur, it would provide a boost for local businesses,” said Mr James.

“Furthermore, consumer confidence has started to rebound, following the post-Budget slump. And, while the latest jobs data showed an increase in unemployment, this was largely due to a rise in the number of people looking for work, with a record number of jobs created in the first part of this year.”

STATE ANALYSIS

New South Wales leads the nation

New South Wales reported the strongest sales in June, up 0.6 per cent for the month in trend terms, while in South Australia spending increased by 0.5 per cent. In the Australian Capital Territory, sales declined by 0.8 per cent in June.  Sales also declined slightly in Victoria with a decrease of less than 0.1 per cent.

INDUSTRY ANALYSIS

Amusement and Entertainment sector tops financial year growth

Nine of the 19 industry sectors saw sales fall in trend terms during June, up from eight in both April and May. Mail and Telephone Order Providers experienced the highest monthly growth, adding 2.9 per cent in trend terms. Amusement and Entertainment spending continued to rise, gaining 1.7 per cent. Hotels and Motels added 1.2 per cent, while Wholesale Distributors and Manufacturers added 1.1 per cent.

A warm start to winter continued to suppress sales for Clothing Stores, which saw spending fall by 2.1 per cent in June in trend terms. Spending also fell for Business Services, Transportation and Utilities.

Note: Figures from the May BSI have been updated to reflect corrections to previously reported data.

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