Poor spending looks set to continue hurting the retail industry, with the Commonwealth Bank Business Sales Indicator (BSI) falling again in June.
The BSI, a key measure of economy-wide spending accomplished via tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals, fell 0.3 percent in June, following a 0.4 percent decline in May.
According to Commonwealth Bank Executive General Manager of Local Business Banking Matt Comyn, the results are another sign of the difficult trading conditions impacting businesses throughout the country.
“Although we haven’t seen any movement on the interest rate front, it’s clear that consumers continue to be rattled by both developments at home and abroad. The fact that we didn’t see an increase in purchases at retail stores during a heavy discount period is further proof of that.”
The news isn’t all bad though, with just four industry sectors contracting in June and the overall State picture improving.
“Four states recorded weaker sales, down from six in May, and we’re seeing some definite shining lights such as the ACT which has shown consistent growth over the last nine months.”
CommSec Chief Economist and BSI Author Craig James said the BSI had been recording improvement from July 2010 however there has been a sharp reversal of the fortunes of the retail sector over the past two months.
“Consumer sentiment, affected by domestic and international developments, is no doubt one of the key factors fuelling the decline in sales and although the State picture is mixed, there is definitely a rocky road ahead,” James said.
Weakness remains narrowly based
According to the BSI, the majority of industry sectors are still recording spending growth in trend terms, with just four of the 20 sectors reporting weaker spending in June. This includes Automobiles & Vehicles, which fell 2.0 percent and Retail stores fell by 0.9 percent in June. Spending at Miscellaneous Stores fell 0.6 percent in trend terms with Automobile/Vehicle Rentals down 0.4 percent.
Amusement & Entertainment (which includes motion picture theatres, bowling alleys, golf courses and video stores) rose 1.3 percent, followed by Clothing stores, up 1.1 percent.
Contracted Services (includes building trades such as electricians as well as veterinary services) was also up, recording a 0.7 percent increase.
Four of the states and territories recorded weaker sales in trend terms in June, down from six in May. The weakest result was in NSW (down 1.5 percent), followed by South Australia and Queensland (down 0.9 percent) and Victoria (down 0.3 percent).
The ACT performed strongly in June, with sales up 1.9 percent, followed by Western Australia and Northern Territory (up 0.1 percent).
According to James, the June figures have highlighted that some sectors have suffered from external factors such as the recent disaster in Japan.
“As a result, this short-term negative performance should improve in the coming months, particularly for sectors such as Automobiles & Vehicles where we see a more positive outlook.”