Retail recovery continues to strengthen indicated by more positive results in October from Commonwealth Bank’s (CBA) Business Sales Indicator (BSI).

The best results in 25 months, the BSI increased by 0.4 per cent in trend terms, following a 0.3 per cent increase in September and a 0.2 per cent increase in August.

According to Matt Comyn, executive general manager, local business banking, Commonwealth Bank, the latest figures were a sign of a more defined shift in consumer spending, something particularly important at this time of the year.

“We are now seeing stronger signs of a recovery in consumer spending which will have associated benefits for businesses across Australia,” Comyn said.

“These latest results are also important as they came before the November rate reduction which could indicate that there are further positive things to come on the back of the associated lift we have seen in consumer confidence. This will be especially important for retailers as we head into what many hope will be a busy Christmas season.”

The number of sectors reporting weaker sales eased from seven in both August and September to five in October. Another two sectors recorded flat growth in October.

Service providers recorded the strongest gain (up 0.7 per cent), followed by Wholesale Distributors & Manufacturers, Transportation and Clothing Stores (all up 0.6 per cent) and Repair Services, Personal Service Providers and Automobiles & Vehicles (all up by 0.5 per cent).

Craig James, chief economist of the Bank’s broking subsidiary CommSec and author of the BSI, said the October numbers reaffirmed that consumers were becoming more confident and that there were further positive signs in the reduced number of sectors experiencing weaker sales.

“Although the cautious consumer attitude has not yet dissipated, something highlighted by the seasonal figures, the latest BSI should provide continued encouragement for Australian businesses,” he said.

“While we are still talking about small numbers, the negative pattern we saw for a large part of this year is turning around. There has also been some strong sector performance particularly in the last month, including Personal Service Providers (such as hairdressers and shoe repairers), which saw growth of 0.5 per cent in October, making it the strongest increase in sales for this sector in 12 months.”

The BSI is a key measure of economy-wide spending, tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals, a sample of approximately 30 per cent of the Australian market.