Business sales record third consecutive rise

Consumers continue to increase their appetite for spending, after the Commonwealth Bank Business Sales Indicator increased by 0.3% in November, with good news for clothing retailers.

The BSI, which tracks the value of credit and debit card transactions processed through CBA point-of-sale terminals, represents approximately 30% of the Australian market.

The BSI rose by 0.3% in November, following similar gains in both September and October, with clothing stores recording the strongest gain in November, up 1%.

This was followed by professional services and membership organisations, up 0.8%, and retail stores, mail order/telephone order providers and contracted services, up 0.7%.

Meanwhile, hotels and motels recorded the weakest result, down 0.7%, followed by utilities (down 0.6%) and miscellaneous stores (down 0.2%).

Matt Comyn, CBA executive general manager of local business banking, says while the overall consumer attitude remains cautious, the uplift in sales continues to be a “good news story”.

“The fact that consumers are more willing to spend now than they were earlier this year is a positive sign, particularly for this time of year,” Comyn says.

“The November figures factor in the first rate reduction witnessed this year, so it’s possible that the latest [rates] announcement… may act as a trigger to encourage additional spending.”

“However, the reasons behind the decision, namely the crisis in Europe, will also have an impact on the consumer mood.”

Given the tough trading conditions of 2011, Comyn predicts many businesses will be looking to capitalise on the busy Christmas trading period.

“The December figures – to be released in January 2012 – will [show how] willing consumers were to spend this festive season or if their conservative nature continued,” Comyn says.

The BSI comes ahead of the latest Small Business Sales Trends report by ANZ, which shows small business sales increased by 4.5% year-on-year in November.

This is the seventh consecutive month of positive annual growth in sales for small businesses, but year-to-date data remains consistent with generally subdued conditions.

Ivan Colhoun, ANZ head of Australian economics and property research, says the data highlights the gap between retail-related small businesses versus traditional trades and services.

“This is really due to a complex mix of factors, including changing consumer preferences and an increased range of direct competitors via rapid growth in the internet and international travel,” he says.

In November, small businesses in appliances and electricals, clothing and fashion, and homewares and furniture saw sales decrease by 0.4%, 3% and 0.5% respectively.

“Restaurants are the only segment of retail-related small businesses that are performing strongly, with growth of 10.2% year-to-date,” Colhoun says.

“Other food outlets, such as fast food and bakeries, are also looking better, with sales growth of 6% year-to-date. Travel and entertainment also received a boost in sales in November.”