Business sales monitor improves again in November but global financial fears cloud recovery

Consumer sales have increased for a third consecutive month, according to the latest figures from the Commonwealth Bank’s Business Sales Indicator, but consumers remain cautious in the lead-up to Christmas.

The result comes despite some bad news in the retail industry this week, with both Billabong and JB Hi-Fi announcing shock profit downgrades in the last seven days.

According to the latest BSI figures, the indicator increased 0.3% in trend terms, following rises in both September and October.

The index measures the value of credit and debit card transactions processed through Commonwealth Bank point of sale terminals, representing about 30% of the market.

The seasonally adjusted figures show the BSI rose by 0.6%, but the number of sectors reporting weaker sales actually declined from five to four, with clothing recording the strongest improvement up 1%.

Professional services and membership organisations increased 0.8%, followed by retail stores, mail order/telephone order providers and contracted services, all of which have increased by 0.7%.

Six of the 20 industry sectors recorded in the index recorded a decline, with the weakest sector hotels and motels, down by 0.7%. Utilities was down 0.6%, along with miscellaneous stores down 0.2%.

All of the states managed to avoid declines, with the ACT also returning to a positive result, up 0.1% after a 0.2% decline in October.

The Northern Territory recorded the strongest result, up 0.4%, while New South Wales, Tasmania, Western Australia, Victoria and South Australia all rose 0.1%.

But despite the positive results, experts warn any recovery will be both short-term and modest. CommSec economist Savanth Sebastian said lower interest rates will be overshadowed by financial troubles in Europe.

“Further encouraging news came in lending data out this month which shows that the latest rate cut has influenced consumers to increase their levels of personal borrowings,” he said.

“However, this has also been tempered by recent weak readings on consumer sentiment as global headlines continue to stay front of mind.”

Sebastian says the critical period is now coming when it will need to be determined whether consumer sentiment has any momentum to last into the New Year.

“Decisive action by Governments to shore up confidence overseas will also have an impact here at home, so it’s very much a wait-and-see scenario.”