The threat that the fall in consumer confidence is having on domestic consumption seems to have been confirmed with the release of the Commonwealth Bank Business Sales Index.
The BSI is based on tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities and the June index shows that:
Economy-wide spending slowed again in June and growth is now the weakest in almost two years. The
Commonwealth Bank Business Sales Indicator (BSI) – a measure of economy-wide spending – rose by 0.3
per cent in trend terms in June – the slowest growth in 21 months.
At a sectoral level, nine of the 19 industry sectors contracted in trend terms in June, up from eight sectors in both April and May. But sales only fell in two of the State & territories
CommSec chief economist Craig James said the BSI “highlights the slowdown that is taking place across broader economic activity”.
Key influences are the Federal Budget and the weather but he seems to be optimistic about the outlook going forward highlighting the bounce in confidence recently, the fading of budget concerns and the positive employment outlook.
James also notes that “At the same time wealth levels are lifting, underpinned by rising share and home prices. The removal of the Carbon Tax will also support household budgets over coming months.”