October’s Commonwealth Bank Business Sales Indicator (BSI) remained flat in October after contracting for ten consecutive months, suggesting retail spending has hit a plateau prior to the the Christmas retail period.
The BSI, which tracks the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals, has consistently been disappointing in 2010, with October no different.
According to Matt Comyn, Executive General Manager, Local Business Banking, Commonwealth Bank, the encouraging signs that were seen last month had not been validated in the latest estimates for October and spending still remained at lower levels throughout the economy.
“At face value, the fact that the BSI remained unchanged in October appears encouraging, especially given that the BSI had previously fallen for ten straight months leading up to August,” said Mr Comyn.
“The overall fundamentals for the Australian economy remain strong leading into the end of the year which is good news for businesses and retailers also have the busy Christmas season to look forward to. However, it is important to recognise that overall growth remains weak and the upward trend we had been witnessing appears to have slowed.”
Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, said that although spending figures remaining unchanged over the last month, the BSI had also seen its biggest annual decline since data was first collected six years ago.
“It’s very clear that recovery in spending across the Australian economy remains elusive,” said Mr James.
“The BSI has under-performed against the Australian Bureau of Statistics (ABS) narrower retail trade series, especially over the past six months and has contracted by 3.9 percent in trend terms over the past year. Given that the BSI is far broader in coverage then ABS retail trade, incorporating business and government spending, the results highlight the weakness of spending across the economy.”
