While weakness still remains recovery in economy-wide spending appears to have consolidated with business sales rounding out positive in the first quarter of 2012, according to the latest Commonwealth Bank business sales indictor (BSI).
The BSI increased by 0.8 per cent in trend terms in March, following a 9.9 per cent gain in February and 1.0 per cent increase in both January and December.
According to Matt Comyn, executive general manager, local business banking, Commonwealth Bank, the continued positive uplift in spending showed that consumers were happy to spend but that they were taking a different approach to where they allocated their money.
“Consumers’ spending patterns have shifted from where they were say one or two years ago and that is being driven by the fact we have become more used to dealing with a new economic climate,” Comyn said.
“We’re seeing a change in the way consumers’ spend their money and it’s also clear they are becoming savvier shoppers. So the fact we are seeing sectors like Amusement & Entertainment posting continued positive gains shows that the experience is becoming more important. It’s a similar story in Mail Order & Telephone Order Providers, where ongoing positive performance speaks to the smarter shopper who is seeking out a bargain.”
“The latest figures have, however, also shown us that the Retail Stores sector expanded by 1.0 per cent in March, the eighth straight month of gains in sales above 1.0 per cent. This is pleasing as it points towards a recovery in a sector which continues to see its fair share of challenges.”
Across sectors, only three of the 20 industry sectors fell in March, the same result as February but up from the January result where two sectors contracted. The strongest monthly trend increase in sales occurred in the Wholesale Distributors & Manufacturers sector (up 1.8 per cent), followed by Amusement & Entertainment sector (up 1.4 per cent), Utilities and Contracted Services (both up 1.3 per cent). The 1.3 per cent lift in Utilities is notable as it was the strongest increase in 40 months.
The weakest sector in March was Hotels & Motels, down by 0.3 per cent and the ninth-straight decline, although the rate of decline has slowed. The Hotels & Motels sector was followed by Mail Order & Telephone Order Providers, down 0.2 per cent, and the second straight decline. Sales in Business Services fell for the fourth straight month by 0.1 per cent.
“There’s little question we are in a far more positive place than we have been for some time,” Craig James, chief economist of the Bank’s broking subsidiary CommSec and author of the BSI, said. “There are, however, a number of economic announcements on the horizon that have the ability to further sway the consumer mood, including the next Reserve Bank meeting and Federal Budget in May, so the April and May figures will be particularly telling.”
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