Australia may not be having the domestic slowdown that some of the recent high frequency data has suggested.
Based on the latest Commonwealth Business Sales Indicator (BSI), which tracks the value of card transactions processed through the bank’s merchant facilities, for the month of August showed an incredibly solid 1.1% increase in sales in seasonally adjusted terms after July’s 0.7% fall. On an annual basis, sales are up 4.6%.
CommSec chief economist Craig James said: “Economy-wide spending has strengthened off the back of improving business and consumer confidence, low unemployment and on-going low interest rates.”
Perhaps it’s this big uptick in spending which has helped drive the latest Westpac Melbourne Institute SME survey to a stunning 15.2% jump in the latest quarter from 83.0 to 95.6 in the second quarter of 2016.
The CBA data shows that “all states and territories have sales above a year ago” with the strongest growth in South Australia (7.8%), and Tasmania (6.5%). New South Wales is up 6.3%, but Victoria is up just 0.4%.
At a sectoral level the data shows “in annual terms in August, only three of the 19 industry sectors contracted: Airlines, Transportation and Automobiles & Vehicles”.
According to CommSec’s James, it all means “the pre-conditions remain in place for firmer spending in the lead-up to Christmas”.
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