Economy-wide spending eased during October by 1.2 per cent in seasonally adjusted terms, according to the Commonwealth Bank Business Sales Indicator.

This follows an outsized gain in business sales in September.

According to Adam Bennett, executive general manager, local business banking, Commonwealth Bank, the latest data is reflective of the challenging operating conditions businesses across the country are currently facing.  

“This year has been marked by volatile external conditions, and this is clearly impacting on consumer spending patterns. Over the past five months solid monthly gains have been exactly offset by losses, creating inconsistent and challenging operating conditions for businesses,” he said.

“Although consumers are leaning towards conservative spending habits again, the good news is that spending is up by a solid 6.2 per cent on a year ago, offering businesses room for some optimism.”

Across sectors, 10 of the industry sectors fell in October – a similar result to September. The strongest monthly trend increase in sales occurred in Automobiles & Vehicles (up 0.7 per cent) followed by Amusement & Entertainment (up 0.5 per cent). Five sectors posted gains of 0.2- 0.4 per cent.
Amongst the weakest sectors in October were Service Providers (down 4.6 per cent), Mail Order & Telephone Order Providers (down 4.1 per cent), and Hotels & Motels (down 0.9 per cent).

At the other end of the scale, spending was strongest at Wholesale Distributors and Manufacturers (up by 24.5 per cent), Amusement & Entertainment (up 12.2 per cent), Retail Stores (up 11.1 per cent), Clothing Stores (up 8.6 per cent), and Contracted Services (up by 7.1 per cent).

Meanwhile, leading the gains in sales was South Australia, followed by Tasmania, and Northern Territory and Queensland.

Craig James, chief economist of the Bank’s broking subsidiary CommSec and author of the BSI, believes the latest figures are reflective of subdued consumer sentiment and outlook.

“Aussie consumers are still spending, but very selectively, as evidenced in mixed spending results across sectors. There are few signs that consumers are becoming more upbeat, ensuring business conditions remain subdued,” he said.

“Interestingly the last interest rate cut in October doesn’t appear to have boosted spending to the same extent as similar moves in May and June. An improvement in the global financial environment will prove vital in lifting consumer sentiment and spending in the lead up to Christmas.”