Consumer spending is up again and has reached its strongest point in 18 months, according to the latest Commonwealth Bank business sales indicator (BSI).
The BSI, which tracks the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals, rose by 0.5 per cent in trend terms in February, following previous gains in December and January.
According to Matt Comyn, executive general manager, local business banking, Commonwealth Bank, whilst sales figures indicate positive results, this is in contrast to the overall economic indicators which continue to show overall weakness in consumer sentiment.
“There’s no doubt that this is the first clear sign that spending is coming back online and that businesses are starting to see the benefit of consumers opening up their wallets,” he said.
“Whilst sales figures are firming, however, they are still very much in a fragile state and we are continuing to see consumer sentiment suffering, particularly as a result of ongoing economic uncertainty both at home and abroad.”
Retail stores sales lifted again, recording sixth straight gain.
Comyn said that performance in the retailing space remained patchy and whilst a number of retailers were doing well, there were also many that were still hurting.
“With growth now starting to build momentum, the Reserve Bank would need to be cautious about any future decisions which could easily tip the balance back into negative territory,” he said.
Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, said that the BSI had consistently under-performed against the Australian Bureau of Statistics retail trade series over the past year but the period of under-performance appeared to have come to an end.
“In recent months, a key source of encouragement had been the fact that the majority of industry sectors were recording spending growth in trend terms. There was similar encouragement in the February data with only two of the 20 sectors reporting weaker spending in trend terms, down from three in January and four sectors in December,” James said.
Only two industry sectors recorded weaker sales in February, which were automobiles and vehicles with sales down 0.1 per cent and mail order and telephone order providers down 0.9 per cent.