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Spending growth is slowing, according to key indicator

Spending rose across the economy in April, according to the latest Commonwealth Bank Business Sales Indicator (BSI), though it appears business sales growth may be slowing as a result of declining consumer confidence.

The BSI, which tracks the value of credit and debit card transactions, rose by 0.5 percent in April, following a gain of 0.6 percent in March and an 0.8 percent rise in February.

This indicates that although business sales looked to be recovering, the outlook may not be as positive as expected thanks to fragile consumer confidence.

Commonwealth Bank executive general manager for local business banking Matt Comyn said declining consumer confidence “has resulted in economy-wide spending growing at the slowest pace in seven months.”

“However, the recent rate reduction by the Reserve Bank, coupled with more favourable jobs data, may assist in lifting consumer confidence and sentiment over the next few months and act as an instigator for additional spending.”

Six industry sectors saw a sales fall in April, up from five in March and four in February.

The strongest monthly increase in sales occurred in the Amusement & Entertainment sector (up 2.3 percent), followed by Wholesale Distributors & Manufacturers sector (up 2.2 percent), Contracted Services (up 1.2 percent), Mail Order & Telephone Order Providers (1 percent) and Utilities (up 0.8 percent).

The weakest sectors included Hotels & Motels, down 0.3 percent, and Business Services, which fell in April for the fifth straight month by 0.1 percent.

Tasmanian sales fell by 0.6 percent, while sales fell 0.4 percent in the Northern Territory.

The strongest result was in South Australia (up 1.0 percent) followed by Queensland (up 0.8 percent), ACT and NSW (both up 0.4 percent), Victoria (up 0.3 percent) and Western Australia (up 0.2 percent).