Spending in Australia remained unchanged in trend terms for the second month in a row according to the latest Commonwealth Bank Business Sales Indicator (BSI).
That is a clear indication of a “slowdown in spending”, the bank said in a release accompanying the report.
Overall there has been a “a progressive slowing in growth since September 2015 when spending grew by 0.6%, followed by growth of 0.5% in October, 0.3% in November and 0.1% in December,” the bank said.
The BSI is an important economic indicator because of the scale of the CBA across the nation. It tracks “the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals”.
So it is mildly concerning that the year-on-year growth rate is slowing sharply with February’s result of 5.6% a big drop from January’s 6.3%. But at the moment the bank says the “current annualised result remains well above the decade-average of 4.8% growth. Six of the eight states and territories had slight increases in monthly sales, however the national score was weighed down by two states (Victoria and Queensland)”.
Craig James, CommSec’s chief economist, said:
Spending has been largely flat so far in 2016, indicating a bit of a pullback in growth from previous months. This softening of spending growth may be due in part to some concerns around the volatility in global financial markets since the beginning of the year. However, consumer confidence remains high and interest rates remain at record lows indicating an increase in spending may not be too far away.
Consumers and the economy often fall into a rut during an election. So the fact that the Turnbull government has floated a July election as a possibility could throw up an alternate theory for the future of spending – that financial market volatility may have simply been replaced with political volatility.
Time will tell.