Spending rises for 26th consecutive month
Spending growth in Australia has reached its 26th consecutive month with an increase of 0.9 per cent, according to the latest Commonwealth Bank Business Sales Indicator.
Annual trend growth in sales hit a fresh four-year high of 11.4 per cent, up from the 10.7 per cent increase in July, the report showed.
Craig James, CommSec chief economist, said the mix of economic indicators were keeping spending growth at higher than normal level.
“We are continuing to see strong growth in consumer spending across the economy with our data reinforcing the June quarter economic GDP growth figures,” James said. “While wage growth remains low, strong -employment figures and still-positive consumer sentiment are keeping spending growth ‘above-normal’.”
There was an increase in spending seen across all states in August, with Queensland the best performing state (up 1.4 per cent), closely followed by South Australia and Western Australia (both up 1.0 per cent). Queensland also continues to outpace the other states with an annual growth rate of 15.2 per cent; followed by Western Australia (up 12.2 per cent); Victoria (up 12.0 per cent), South Australia (up 11.2 per cent); NSW (up 9.0 per cent), ACT (up 7.6 per cent); Tasmania (up 7.1 per cent); and Northern Territory (up 6.0 per cent).
James said Queensland’s continued strong growth was buoyed by an economic rebound, particularly in mining activity, strength in tourism, lifting interstate migration and solid jobs growth.
“The state added an additional 46,500 jobs over the year to August,” James said.
All spending sectors except for clothing stores rose in trend terms for the month of August. The biggest lift in sales occurred for amusement and entertainment up by 2.1 per cent, followed by government services up 1.7 per cent and hotels and motels which rose 1.1 per cent.
Sales at clothing stores fell by 0.1 per cent, however.
“We saw spending fall at clothing stores in August, after a small rise in July, supported by the end of financial year sales,” James said. “Interestingly, we saw a strong uptick in spending for amusement and entertainment over the month corresponding with higher credit card balances.”
Spending fell by 0.1 per cent over the past year in the clothing stores sector, while the sectors with strongest annual growth in August included retail stores (up 15.7 per cent), automobiles and vehicles (up 13.9 per cent) and hotels and motels (up 13.2 per cent).
“While annual growth of sales at retail stores is seemingly solid at 15.7 per cent, this is from a low base,” James said. “Retail stores recorded annual declines in sales from January 2016 to November 2017.”
James said Tourism continues to grow as a weaker Australian dollar attracts more international and domestic travellers.
This article first appeared on Inside Retail, a sibling publication to Inside Franchise Business.