Consumer spending softened in December
Consumer spending has softened, falling 1.9% last month, seasonally adjusted, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
This marks a u-turn after spending rose by 2.4% in November, and is bad news for retailers banking on a Christmas trading boost.
This is extending the “erratic” spending pattern witnessed over the past seven months, Craig James, Chief Economist,
CommSec, with “uncertainty about the direction consumer spending will take in the New Year.”
However, spending at Retail Stores was up 7.4% and Amusement & Entertainment and Automobiles on an annual basis, although fell for hotels and service providers. The BSI tracks credit and debit card transactions processed through Commonwealth terminals.
While seasonally adjusted spending softened, the less volatile trend estimate of spending rose by 0.3 per cent in December, the fifth straight monthly increase.
Lex Thornton, CBA’s General Manager Operations and Sales Strategy, Local Business Banking, believes the ongoing inconsistencies in business sales performance are reflective of today’s conservative consumer.
“Although the overall economic picture showed signs of improvement in the latter half of 2012, consumers are still proceeding with trepidation. If consumers remain prudent, it is unlikely that we will see any consistent or significant spending trends form in the near future.
“We know that many small businesses across the country were hoping for a buoyant festive season. While we saw a lift in spending in November, unfortunately the BSI showed that sales softened throughout December.
“For 2013 it is important that businesses make sure they have solid processes and plans in place to navigate future volatility,” she warned.
Sales rose most in states including Victoria and ACT (both up 0.5 per cent) followed by NSW (up 0.4 per cent), Queensland (up 0.3 per cent), and Tasmania (up 0.1 per cent).
Surprisingly, sales were flat in boom state Western Australia.
Northern Territory and South Australia were both down 0.3 per cent.