Retail’s strongest month since the GFC, CBA card data
CBA’s business sales indicator (BSI) for February has posted a 1 per cent increase after broadly flat trend growth over the last twelve months, driven by a 1.9 per cent uplift in retail store spending.
CommSec chief economist Craig James said the figures were a sign that recent tightening in the labour market was beginning to have a positive impact on spending, alongside competitive pricing by retailers.
“A firmer job market and competitive pricing by retailers appear to be underpinning spending,” James said.
It’s an encouraging sign for the retail sector, which saw monthly spending in January increase by just 0.1 per cent on ABS figures.
Although if the sales uplift is being driven by discounting it could still signal headwinds for margins.
Combined retail and clothing stores were particularly positive, growing by 0.9 per cent in February, compared to a year ago when the BSI was tracking a 0.3 per cent monthly fall in spending from this category.
CBA obtains the BSI by tracking the value of credit and debit card transactions processed through its merchant facilities in Australia.
The overall annual trend growth rate lifted from 6 per cent to 7 per cent, the fastest rate of growth in over two years, and more than double the decade average of 3.2 per cent.
At a sector level 16 of the 19 industry sectors that CBA tracks for the BSA rose in trend terms in February, sales also rose in all states, but were down in both territories on the prior month.
The seasonally adjusted BSI rose by 1.7 per cent, up .5 per cent from the 1.2 per cent rise in January.
The BSI result for retail in February compounds an encouraging January result, which according to James is a sign that its been a strong start to 2018.
“This year we saw much stronger growth in the first two months of the year, compared to the same time last year. Seemingly consumers have greater job confidence and that, in turn, is causing people to be more confident about spending,” said James.
Consumer confidence is also up 2.2 per cent this week, recovering from a 2.5 per cent decline last week, according to the ANZ-Roy Morgan Australian Consumer Confidence index.
Released on Tuesday, the index now stands at 118.5 – pointing to further resilience in consumer perceptions.
“Of note is the improvement in households’ perceptions of their finances, which points to some resilience in consumer spending, despite the numerous headwinds households face,” ANZ’s head of Australian economics Felicity Emmett said.
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