Data from a Commonwealth Bank of Australia (ASX:CBA) report has shown lower spending across Australia. The seasonally adjusted Business Sales Indicator (BSI) tracks debit and credit card transactions at CBA’s point-of-sales terminals and includes business and car sales, rather than just retail spending. The BSI indicated a .3 per cent decrease in spending, down from the .8 increase in January. The report also showed that spending growth had relaxed to 5.7 per cent in the previous 12 months. This is the slowest in two years and almost half the one-year record that was achieved last September.
These numbers came in lower than expected. Some analysts believed spending in February would have benefitted by low petrol prices. Craig James, CommSec chief economist, believes this weak data is only temporary. Despite the drop in spending, he reaffirmed the stance that lower oil prices would benefit overall spending. “But the outlook is still positive. Lower petrol prices and lower interest rates will boost spending power,” he said. Mr. James also believes tourism and a strong home construction sector will increase spending in the following months. “Sales at retailers that are dependent on home building and purchases should remain well-supported,” he said. “Domestic travel has lifted with the lower Aussie dollar and that is helping hotels and motels and other tourism operators.” Although the lower Aussie dollar is providing support to the tourism sector, Mr. James believes it has also contributed to the lower than expected spending data. According to Mr. James, the weakened AUD has contributed to the weak wage growth in Australia. This may have also extended to weak consumer spending. However, Mr. James believes the RBA will alleviate some of this weakness by cutting interest rates yet again in May of this year.