Spending by Australian businesses recorded the highest sales growth in more than seven years in September, but growth in economy-wide spending continues to slow, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
The Business Services sector, which includes businesses such as Office Furniture, Commercial Equipment, Electrical Parts, Computers and Computer Equipment and Software, recorded spending growth of 5.3 percent in trend terms in September – the biggest rise since January 2008.
The lift in business spending continues the recent strong growth for the sector following the government’s budget stimulus, after contracting briefly in August.
The growth wasn’t shared more broadly across industries with economy-wide spending up by just 0.3 percent in trend terms, after growth of 0.5 percent in both August and July.
While annual growth of spending also eased from 7.1 percent to 6.8 percent, this rate still remains well above the decade average of 5.1 percent.
The more volatile seasonally adjusted measure of the BSI posted a solid 2.8 percent gain in September – the strongest growth since May 2013 – while annual seasonally adjusted growth lifted from 5.7 percent to a 10 month high of 8.9 percent.
Craig James, Chief Economist, CommSec, said the strong growth in business spending indicates the Government’s stimulus measures continue to provide a boost to businesses.
“The stellar rise in business spending shows that the Federal budget initiatives are proving to be sustainable over a longer period, however, this growth hasn’t helped boost the broader economy. Still, while economy-wide spending growth has slowed, it remains well above the decade average and we’ve also seen strong seasonally adjusted growth,” Mr James said.
“With growth across a number of retail-based sectors, businesses should be feeling optimistic leading into the holiday season.”
At an industry level, Business Services was the clear stand-out sector in trends terms for September and sales also rose at Miscellaneous Stores, up 1.2 percent.
The large retail sector also grew by 0.5 percent in trends terms, after rising between 0.6 to 0.7 percent per month over the previous seven months.
Sales rose in only four of the states and territories in September, with Tasmania experiencing the highest growth, up one pe cent, as well as South Australia (up 0.5 percent), Western Australia (up 0.4 percent) and Queensland (up by less than 0.1 percent).
Sales fell the most in Victoria, down 0.8 percent, with ACT (down 0.7 percent), Northern Territory (down 0.5 percent) and NSW (down 0.1 percent) all also experiencing declines.
Tasmania also recorded the strongest growth in annual terms (up 9.1 percent), followed by South Australia and ACT (up 8.4 percent), Western Australia (up 7.9 percent) and Queensland (up 5.9 percent). Three states and territories however recorded sales figures below the previous year, with Northern Territory down 8.3 percent, NSW down 4.7 percent, and Victoria down 1.7 percent.
The BSI is a measure of economy-wide spending, tracking the value of credit and debit card transactions processed through Commonwealth Bank point of sale terminals.
