BSI on the mend in April
The Commonwealth Bank’s Business Sales Index (BSI) has continued its rally, posting a 0.5 per cent increase in trend terms in April, representing a 4.9 per cent growth in annualised figures.
According to the BSI, economy-wide spending grew by 0.5 per cent in trend terms in April, matching the gain in March, following a 0.6 per cent increase in February. Over the past eight months sales have lifted on average by 0.6 per cent a month, taking the annual growth in spending to 4.9 per cent.
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.
According to Adam Bennett, Executive General Manager, Local Business Banking, Commonwealth Bank, the increase in consumer spending should give a much needed boost to business confidence.
"With spending increasing for the eighth consecutive month in trend terms, it’s clear that consumer confidence is on the rise and businesses should look to capitalise on consumers’ willingness to spend. We know a lot of business owners are treading cautiously at the moment due to concerns around the broader economy, but the latest BSI results should provide further comfort that market conditions are improving."
"Furthermore, the April BSI results don’t factor in the latest reduction in interest rates announced by the Reserve Bank this month, so it’s more than likely we’ll see a further uplift in spending patterns across the month of May now that rates are at historic lows. This should give consumer confidence another boost and offer a promising outlook for businesses across the country," said Mr Bennett.
Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, believes the latest results provide a good indication that consumer confidence has turned a corner.
"The fact is, we’ve seen consumer spending steadily increase over the past eight months, which is good news for business owners. Despite the wider economy not travelling at top speed, the latest BSI results certainly indicate business conditions are improving."
"Another sign of encouragement is that most industries experienced an increase in sales over the month of April. The increase was led by Service Providers and the Utilities sector, which both grew by 1.3 per cent in trend terms. In addition, a number of other sectors also showed signs of improvement, including the 1.0 per cent growth recorded by Professional Services Organisations," said Mr James.