Consumer confidence is on the rise, with spending rising for the third straight month in May, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
The BSI, which tracks the value of credit and debit card transactions, found that the economy has seen its strongest 3-month period of growth in 6 years.
“This is good news for businesses across Australia, as it means consumers are more confident, and the earlier tentative signs of improvement in spending are now being translated into firmer readings,” says Savanth Sebastian, economist at CommSec.
Spending was up across 13 of 20 industry sectors in May, down from 15 in April.
The retail stores sector recorded the strongest growth, up 12.9 percent from last year, while the wholesale distributors and manufacturers sector rose by 11 percent.
Mail orders and telephone order providers lost 1.6 percent, with automobiles and vehicles, business services, and hotels and motels also dropping.
The strongest growth was recorded in NSW, up 1.9 percent, followed by the ACT and South Australia.
“It would appear from BSI data that consumers are feeling more confident, and a clear upward pattern in spending is emerging. This may have been boosted by the Reserve Bank’s decision to cut interest rates in May, and hopefully we’ll see this momentum in spending continue,” says Adam Bennett, executive general manager of local business banking at the Commonwealth Bank.
Despite the increase in consumer confidence, businesses have remained subdued, with business owners cautious about decision making and spending in the lead-up to the Federal election.