Australia | Mar 20 2012
– CBA's BSI rose again in February
– Data suggest a recovery is gathering momentum
– Further good news would encourage consumers to lift spending further
By Chris Shaw
Australia appears to be experiencing a firm recovery in spending, as the Commonwealth Bank Business Sales Indicator (BSI) once again showed positive growth for February.
The bank's BSI measures economy-wide spending by tracking the value of credit and debit card transactions processed through CBA point-of-sales terminals, which reflects around 30% of the total market.
In February the BSI rose by 0.7% in trend terms, this following rises of 0.9% in both December and January. CBA executive general manager of Local Business Banking, Matt Comyn, said the figures indicate the recovery is gathering momentum as the willingness to spend is becoming more defined monthly.
While spending habits remain weak when compared to pre-GFC standards, the BSI data show the intention to continue spending is there. This is a positive for the broader economy in Comyn's view. Despite this, confidence overall remains low and Comyn notes consumers continue to be spooked easily. This means any negative economic news has the potential to quickly change the outlook for spending.
BSI author Craig James, who is chief economist at CommSec, suggests the recovery continues to be framed by how various sectors and states and territories are performing. Factoring this in, James suggests the overall picture is now much more positive than was the case for much of 2011.
As an example, James notes the sectors where the most negative news had been concentrated were the key beneficiaries of increased spending in February. These sectors include the Wholesale Distributors and Manufacturers, Retail Stores and Clothing Stores.
In contrast, only thee sectors recorded lower numbers in February – Hotels and Motels, Mail Order and Telephone Order Providers and Business Services. Two other sectors – Automobile and Vehicles and Miscellaneous Services were broadly flat.
James notes for the fifth straight month no states or territories recorded weaker sales in trend terms, though the BSI in Western Australia was largely flat. ACT and South Australia delivered the strongest results.
It is James' view that Australian consumers will want to see more good news to increase the amount they spend, with stability in Europe, job growth and calm financial markets all considered key factors with respect to consumer sentiment.
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