Annual spending growth highest in four years
Spending was up across all industry sectors by 1 per cent in July, driving annual spending growth to a four-year high of 10.4 per cent, according to Commonwealth Bank’s latest Business Sales Indicator report.
The report noted that spending has been remarkably stable this year, rising by around 1 per cent every month, as consumers take advantage of falling prices across a range of goods and services due to retail deflation.
“Our data shows the strongest annual spending growth in four years and this is a particularly encouraging sign for retailers and business owners, with spending broad-based across all industry sectors and Australian states,” CommSec senior economist Ryan Felsman said.
“Consumers are really benefiting from retail deflation, with prices falling across a raft of goods and services and this is encouraging Aussies to open their purses and wallets.”
While the automobile sector saw the strongest growth in July at 1.2 per cent, retail stores have seen the strongest growth on an annual basis at 16.6 per cent.
The only area where spending has been falling in annual terms is the contracted services sector, which is down 0.2 per cent over the year.
“Despite weak wage growth and high mortgage debt in Sydney and Melbourne in particular, our data is telling us that overall, Aussie consumers are more comfortable to spend, particularly on credit cards,” Felsman said.
“This coincides with a stronger jobs market and the positive wealth effects from the Australian share market straddling 10-year highs, as well as falling savings rates, all of which are supporting household consumption.”
In July, the strongest growth occurred in Queensland, which was up 1.7 per cent, followed by Victoria and Northern Territory, which were both up 1.1 per cent.
Felsman noted that interstate migration and tourism to Queensland are contributing factor’s to that economy’s growth.
“It is no surprise that Queensland is the leader,” he said.
“We are also seeing the mining sector rebounding somewhat and that is creating jobs.”