Commonwealth Bank tracks dropping spending
The Commonwealth Bank has confirmed that consumer spending has significantly dropped in the September quarter, with the latest Business Sales Indicator showing a 0.4 per cent drop.
The BSI tracks economy-wide spending, tracking the value of credit and debit card transactions through Commonwealth Bank point-of-sales systems, which represents a 30 per cent sample of the market.
The BSI fell by 0.4 per cent in seasonally adjusted terms in August, following a 5.4 per cent decline in July.
According to Gary McGrath, Acting Executive General Manager for Local Business Banking, Commonwealth Bank, the continued slide in spending is indicative of today's consumer.
"The latest BSI is demonstrating that an already cautious consumer is moving into more conservative territory," said Mr McGrath.
Mr McGrath said that despite the economy being in good shape, consumers aren’t faced with the same need to spend that they have historically faced.
"What this means for businesses is that they need to ensure they are well prepared to continue dealing with a more absent consumer. That includes reviewing their business models and focusing on areas like productivity and efficiency to ensure they can control costs and maintain a healthy balance sheet,” Mr McGrath said.
Craig James, Chief Economist of the Bank's broking subsidiary CommSec and author of the BSI, said the case for further monetary stimulus had been advanced after the latest disappointing results.
"We are facing a strong uphill battle when it comes to getting consumers back on the spending path," said Mr James.
"Sales performance is struggling and clearly something is needed to encourage further spending throughout the economy. Even in the resources-rich state of Western Australia we have been witnessing a gradual softening in sales figures since earlier in the year, demonstrating the longer-term effects of weak consumer confidence."
Three of the states and territories recorded weaker sales in trend terms in August. Sales in NSW fell by 1.0 per cent while sales fell 0.4 per cent in Victoria and by 0.1 per cent in Western Australia. The strongest results were in Northern Territory (up 0.9 per cent), South Australia and Tasmania (both up 0.7 per cent) followed by Queensland and the ACT (both up 0.1 per cent). The trend BSI has now risen for 15 straight months in Northern Territory, for 14 straight months in Queensland, for 13 straight months in South Australia and 11 straight months in the ACT.