Consumers still weary

Published on Thu, 21/07/2011, 02:30:18

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There are no signs of improvement just yet with another fall in June sales figures, according to the latest Commonwealth Bank Business Sales Indicator (BSI).

The BSI fell by 0.3 per cent in trend terms, following a 0.4 per cent decline in May.

Matt Comyn, executive general manager, local business banking, Commonwealth Bank, said the latest results were a further sign of the tough conditions facing a number of businesses throughout the country.

“The level of negative sentiment we are seeing amongst consumers is definitely worrying and the latest BSI is proof that this sombre mood is hurting businesses,” Comyn said.

“Although we haven’t seen any movement on the interest rate front, it’s clear that consumers continue to be rattled by both developments at home and abroad. The fact that we didn’t see an increase in purchases at retail stores during a heavy discount period is further proof of that.”

The majority of industry sectors are still recording spending growth in trend terms, a similar result to both April and May. Only four of the 20 sectors reported weaker spending in trend terms in June, with Automobiles & Vehicles down 2.0 per cent and Retail stores falling by 0.9 per cent. Spending at Miscellaneous Stores fell 0.6 per cent in June with Automobile/Vehicle Rentals down 0.4 per cent.

On the other hand, Amusement & Entertainment continued its strong run, up 1.3 per cent, followed by Clothing stores up 1.1 per cent. Both sectors were again likely beneficiaries of the colder weather which helped drive consumers indoors and to purchase warmer clothing.

Craig James, chief economist of the Bank’s broking subsidiary CommSec and author of the BSI, said that the June figures showed that recent optimism had clearly turned out to be a mirage.

“The BSI had been recording improvement from July 2010 however there has been a sharp reversal of the fortunes of the retail sector over the past two months,” James said.

“Consumer sentiment, affected by domestic and international developments, is no doubt one of the key factors fuelling the decline in sales and although the State picture is mixed, there is definitely a rocky road ahead.”
 


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