Spending in the economy slowed in January

Sales growth slows to a more measured rate

  • The January Commonwealth Bank Business Sales Indicator saw 0.3 per cent trend growth in economy-wide spending
  • Spending is up 7.1 per cent on a year ago
  • Retail sector slows but there was solid growth in the business and government sectors

Economy-wide spending slowed in January after solid growth in 2015 according to the latest Commonwealth Bank Business Sales Indicator (BSI).

Spending grew in trend terms by 0.3 per cent in January, after lifting by 0.4 per cent in December and 0.5 per cent in November. While this result remains in line with the decade average, monthly spending growth was well above average over most of 2015, particularly during the March-June period.

Annual growth of spending also eased from 7.3 per cent to 7.1 per cent in January. However this result remains well above the decade-average of 4.8 per cent growth and has remained at healthy levels for the past ten months.
  
The more volatile seasonally adjusted measure of the BSI rose by 0.6 per cent in January, after a 0.9 per cent gain in December, while annual seasonally adjusted growth lifted from 7.4 per cent to 7.6 per cent.

Craig James, Chief Economist, CommSec, said that while growth may have slowed, businesses should not be too alarmed.

"While spending growth has eased, it follows solid gains in 2015 and the result still remains in line with the decade average.

"Although businesses would have liked to see a more positive start to the year, particularly in the retail sector, consumer confidence remains high and interest rates remain at record lows. Additional data shows that business lending in 2015 was not far off the record highs set during the mining boom, showing that businesses remain optimistic," Mr James said.

Industry analysis
The retail sector saw a slowdown in spending growth, growing by just 0.1 per cent - the slowest growth in 28 months. The 0.2 per cent fall in sales at Clothing Stores was the biggest in 17 months.

Of the sectors experiencing gains, notable was Government Services, up 3.1 per cent, the fifth consecutive month of growth. Business Services rose by 1.5 per cent in January, the 11th straight gain.

At the other end of the scale, six of the 19 industry sectors fell in trend terms in January, including Airlines, Professional Services Membership Organisations, Clothing, Transportation, Contracted Services and Amusement & Entertainment.

State-by-state analysis
Sales rose in all but one of the states and territories in January, with the Northern Territory posting the strongest growth (up 1.5 per cent), followed by NSW (up 1.1 per cent), ACT (1.0 per cent), Victoria (up 0.9 per cent), Tasmania (up by 0.7 per cent), Western Australia (up 0.6 per cent) and Queensland (up 0.5 per cent). South Australia was the only state or territory to experience a small decline in sales, down 0.05 per cent.

Every state and territory posted sales above a year ago. Strongest growth was in Tasmania (up 12.7 per cent) followed by ACT (up 11.1 per cent), Western Australia (up 10.3 per cent), Victoria (up 7.8 per cent), Queensland (up 7.6 per cent), NSW and South Australia (both up 6.7 per cent) and the Northern Territory (up 4.9 per cent).

The BSI is a key measure of economy-wide spending, tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals.



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