Strong market, spending increases good start to 2013

by 23 Jan 2014

Economy-wide spending finished strongly in 2013, with December recording a 0.9 per cent rise in sales.

This was the 16th straight month of spending growth, according to the latest Commonwealth Bank Business Sales Indicator (BSI).

In annual terms, the BSI rose 9.8 per cent in December, the fastest growth rate in more than six years.  

The seasonally-adjusted measure of sales also continued this positive trend, rising by 0.4 per cent in December after a 0.2 per cent lift in November and a 4.0 per cent rise in October.

This is the first time spending has grown for three consecutive months since the first quarter of 2013. The seasonally-adjusted annual growth rate rose from 9.4 per cent in November to 10.6 per cent in December.

CommSec economist Savanth Sebastian says the spending increase in 2013 has provided a strong foundation for further increases in 2014.

“We are seeing the housing recovery continue to gather momentum, while rising wealth levels, low interest rates and a recovering share market is supporting consumer confidence and in turn spending,” said Sebastian.

“The lower Australian dollar should also provide a boost to exports in coming months and help to alleviate the risks surrounding the rebalancing of the economy. Dually, improving prospects for a broader global economic recovery are in part supporting a more positive outlook for consumer sentiment.”

Lex Thornton, CBA general manager of local business banking, said economy-wide spending has grrew at a healthy, sustainable pace in December, adding to the continual rise in spending over the past 16 months.

“Businesses will no doubt be looking for the upward spending trend witnessed throughout the past year to continue in 2014. Regardless of this positive trend, cash flow management and efficient business practices should remain a priority,” said Thornton.

Sales were firm across the country, with seven of the states and territories recording stronger sales in trend terms in December.

South Australia experienced the largest spending increase, up 1.7 per cent, followed by Western Australia (up by 1.2 per cent), New South Wales (up 1.0 per cent), Victoria (up 0.9 per cent), Northern Territory (up 0.8 per cent), Queensland and Tasmania (both up 0.3 per cent).

The Australian Capital Territory experienced its fourth month of negative sales growth, with spending falling 1.3 per cent in December.

In annual terms, no state or territory recorded sales growth below that of a year ago, with South Australia, Northern Territory, New South Wales and Tasmania leading the way ahead of Western Australia, Victoria and Queensland.