Commonwealth Bank says Aussie spending will grow despite tough budget

The Commonwealth Bank’s latest Business Sales Indicator (BSI) suggests Aussie spending will grow in the next few months, despite the tough budget announcement.

The latest seasonally adjusted measure from CBA showed economy-wide spending continued to grow steadily over April, lifting 1.6% up from 0.7% the month before.

The Commonwealth Bank’s chief economist Craig James said that positive economic conditions will continue to create a solid foundation for future growth.

“The economy has outperformed government forecasts, with lower than expected unemployment and higher than anticipated levels of economic growth. Now that pre-budget jitters are out of the way, a low interest rate environment, employment growth and lifting home values should continue to support spending growth in 2014,” said James.

CBA’s executive general manager Adam Bennett said despite some uncertainty in the lead up to the Federal Budget, consumers continued to spend, boosting turnover in most industry sectors.

“This month’s figures confirm that business conditions remain healthy around most of the country, with sales growing at a slower but more sustainable pace,” said Bennett.

11 out of 19 industry sectors saw an increase in sales during April, down from 15 in March. Entertainment had the largest rise with spending up 3.2% following a 4.1% rise in March and a total increase of 58.2% since April 2013.

However, Bennett warned that although the overall trend was healthy, not every sector saw sales growth over last month. Spending in sectors including transportation and the car industry saw a decline, with vehicle rental businesses experiencing the largest annual spending drop down 2.1% over the year.

“While this month’s figures are generally good news for business owners, they also highlight the importance of remaining well prepared for spending fluctuations,” said Bennett.

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