- Growth in electronic spending in Australia moderated in March, according to the Commonwealth Bank’s Business Sales Indicator (BSI).
- Economy-wide sales rose 0.7%, continuing to moderate from the levels seen earlier this year.
- Spending at retail stores grew by a still-healthy 0.7%.
Growth in electronic spending in Australia moderated in March, albeit it still remains well above the levels seen in recent years.
According to the Commonwealth Bank’s Business Sales Indicator (BSI), a gauge that measures electronic spending through CBA terminals, economy-wide sales rose 0.7% last month in trend terms, continuing to moderate from the levels seen earlier in the year.
However, as seen in the chart below, monthly growth still remains significantly higher than the levels seen throughout much of the past two years.
The BSI has now risen for 14 consecutive months, the longest stretch of gains dating back to 2014.
That likely reflects a combination of factors, including stronger labour market conditions and faster population growth. More people with more jobs should, in normal circumstances, help to boost aggregate spending levels.
Despite the modest deceleration seen in March, annual growth in sales rose from 6.7% to 7.2% during the month, the fastest pace in over three years.
It’s also more than double the average of 3.2% seen over the past decade.
The BSI tracks the value of credit and debit card transactions processed through the Commonwealth Bank merchant facilities over a specific month, and includes spending on retail goods as well as services. It does not include cash transactions.
As such, the CBA says it’s comparable to nominal household consumption expenditure in Australia’s quarterly GDP reports. Household consumption is the largest part of the Australian economy at around 60%.
While the BSI only tracks spending processed through CBA terminals, as Australia’s largest retail bank, it is likely reflective of broader spending patterns across the economy.
Over the month, Commsec said spending increased across 15 of the 19 industry sectors it monitors.
“Sales were down at business services (-0.9%) followed by transportation (-0.4%), utilities (-0.2%) and wholesale distributors and manufacturers,” it said.
“The biggest lift in sales occurred at miscellaneous stores (+1.2%), hotels and motels (+0.9%) and retail stores (+0.7%).”
Over the year, sales increased in all categories except for contracted services.
The strength in the BSI suggests nominal household consumption likely remained firm in the first quarter of the year, mirroring the outcome seen in the final three months of 2017.
However, that theory won’t be put to the test until Australia’s official Q1 GDP report is released on June 6.
Nearer-term, Australia’s March retail sales report will arrive on Tuesday, May 8. Separate data from the National Australia Bank (NAB) released this week suggests spending on retail goods slowed sharply following a large increase in February.
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