Spending across the Australian economy appears to be lifting

Spending levels are looking pretty strong in Australia, according to the Commonwealth Bank.
  • Spending levels across the Australian economy remain firm, at least based on electronic payments processed by the Commonwealth Bank.
  • Spending rose by 0.9% in trend terms, leaving the annual increase at 8.4%.
  • Sales rose in all states and territories over the year, and in all bar one sector.

Spending levels across the Australian economy remain firm, at least based on electronic payments data by the Commonwealth Bank, Australia’s largest retail bank.

Its Business Sales Indicator (BSI) rose by 0.9% in trend terms in April, around the same level seen in each of the past five months.

“Across all states and territories, sales were stronger,” said Craig James, Chief Economist at the bank’s broking arm, Commsec.

Victoria led the pack, increasing by 1.2%. It was followed by the ACT, New South Wales, Queensland, Tasmania where sales lifted by between 1.1% to 0.8%.

Population growth is stronger in Australia’s eastern states, with broader economic conditions also firmer than in other parts of Australia.

Reflecting those trends, sales in South Australia, Western Australia and the Northern Territory lagged the national average, lifting by between 0.4% and 0.5% over the month.

14 of the 19 sectors monitored also saw spending levels lift, including in retail, the largest component in the BSI.

“Sales at combined retail and clothing stores lifted by 0.6% in April,” said James. “Retail and clothing stores account for 40% of the BSI, so strength in these sectors strongly influences economy-wide spending.”

The result is at odds with separate data released by the National Australia Bank earlier this week which suggested electronic spending at retailers fell last month.

The recent improvement in the Commonwealth Bank measure, seen in the chart below, saw annual growth in spending lift to 8.4% in trend terms, above the 7.7% level in March.

CBA

Sales increased in all states and territories over the year, ranging from 10.8% in Queensland to 6.9% in New South Wales. Similar trends were also evident in sales by sector where all bar one saw spending lift from a year earlier.

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, explaining the strength in the BSI compared to actual household spending figures released by the ABS.

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.

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