SMBs have received some positive news in the lead up to Christmas with a new study showing sharp rebounds in consumer spending.
Following a fall in sales in July and August, spending lifted by 3.9 percent in September marking the biggest monthly gain in four and a half years according to the Commonwealth Bank’s Business Sales Indicator (BSI).
The BSI measures economy-wide spending, tracking credit and debit card transactions processed through the Commonwealth Bank’s point of sale terminals and showed spending was up 6.9 percent in September compared to a year ago.
Commonwealth Bank executive general manager of local business banking, Adam Bennett said while the rebound is positive for businesses, it remains to be seen if this increase can maintain momentum over the coming months.
“There was a significant rebound in spending in September, which saw the biggest monthly gain in over four years. However, while this is an encouraging result, businesses should be mindful that the data is volatile and presently consumers are not displaying any meaningful or consistent spending trends,” he said.
With ongoing inconsistencies, Bennett recommends businesses put solid plans into place and remain practical as consumers show signs of caution.
CommSec chief economist and BSI author, Craig James said while the economy has been patchy in recent months, interest rate cuts are helping business.
“Over the past five months, we have seen fluctuating peaks and troughs in consumer spending. The good news is that interest rate cuts are having tangible flow-on effects for businesses, which we’ve seen through several increases in spending this year,” he said.
“While we saw a 3.9 percent increase in sales in seasonally adjusted terms this month, the less volatile trend measure has remained relatively flat for the past three months, hopefully the recent interest rate cut in October will spur consumer confidence, and continue spending momentum in the lead up to Christmas,” he added.
According to the BSI, ten of the industry sectors fell in trend terms in September. The strongest monthly sales increases in September occurred in the hotels and motels and the miscellaneous stores industry sectors (both up by one percent).
Service providers and mail-order and telephone-order providers were among the weakest sectors with sales down 3.2 percent and 2.7 percent respectively.