CommBank data show December spending boost
Economy-wide spending grew 0.4 per cent from November to December 2018, driven by the purchase of “little luxuries”, according to the latest Commonwealth Bank Business Sales Indicator, which provides a broader and more timely picture of spending compared to the Australian Bureau of Statistic’s monthly retail spending report.
The latest Business Sales Indicator found that spending on non-essential items grew in December, but in general, consumers are spending less on big-ticket items.
“The softening of home prices has made people more reluctant to buy big-ticket items like cars, and car sales have indeed eased from recent highs,” CommSec chief economist Craig James said, with spending on automobiles having fallen 1.3 per cent.
Despite this, James said that business conditions and confidence are generally good and noted that consumers spent more in December 2018 than the previous year. Indeed, spending in December 2018 was up 5.3 per cent compared to 2017.
This is in contrast to Illion’s recently published analysis of business expectations, which recorded the lowest level of business confidence since the December 2017 quarter, and Westpace-Melbourne Institute’s Consumer Sentiment Index, which last week measured pessimistic consumers outweighing optimistic ones for the first time in 13 months.
Growth by industry
The entry and exit of retailers from the market has made it difficult to compare retail store sales, according to James, but the data suggests that clothing store sales rose 0.3 per cent in trend terms during December.
The largest spending growth was seen in transportation (3.1 per cent), hotels and motels (0.7 per cent), and personal service providers, such as barbers and health and beauty services (0.6 per cent).