In what could be positive news for retailers in Australia, economy-wide spending has increased over April by 0.5 per cent in trend terms.
This figure comes from the Business Sales Indicator (BSI) released by Commonwealth Bank earlier this week (May 22). The BSI measures economy-wide spending, and examines the values of credit and debit card purchases that are made.
According to the BSI, spending has trended upwards for the last eight months and is a positive indicator for the economy and consumer confidence.
“With spending increasing for the eighth consecutive month in trend terms, it’s clear that consumer confidence is on the rise and businesses should look to capitalise on consumers’ willingness to spend,” said Commonwealth Bank executive general manager of local business banking Adam Bennett.
Mr Bennett continued to state that this is an encouraging sign for those businesses who have had concerns over the future of the economy in recent months.
Figures for spending on retailing in Australia were the strongest in South Australia, where residents increased their spending by 1.3 per cent in April, equating to a 12.4 per cent increase over 12 months.
Spending in all states and territories has improved when compared to a year ago, which may be attributed to the slashes in the cash rate since October last year. Lower interest rates would have helped many households across the country save money on mortgage payments, allowing them to spend more on retailing and other items.
And with the Reserve Bank of Australia lowering the cash rate again this month, there may be more motivation for consumers to loosen their purse strings further.
“Furthermore, the April BSI results don’t factor in the latest reduction in interest rates announced by the Reserve Bank this month, so it’s more than likely we’ll see a further uplift in spending patterns across the month of May now that rates are at historic lows,” said Mr Bennett.