The extra day in February and early timing of Easter appear to have influenced the Commonwealth Bank Business Sales Indicator (BSI) in March – a measure of economy-wide spending. So the results should be interpreted with care. More considered analysis will be possible with publication of the April BSI.
The Business Sales Indicator is reported to have contracted by 0.7 per cent in March after declines of 0.5 per cent in February and 0.2 per cent in January. Annual growth slowed from 5.6 per cent to 4.0 per cent. The seasonally adjusted BSI fell by 1.8 per cent in March after falling 1.7 per cent in February.
At a sectoral level, 13 of the 19 industry sectors contracted in trend terms in March, up from 12 sectors in February. And sales fell in six of the eight states and territories in March.
The seasonally adjusted and trend estimates of the BSI results are derived via the SEASABS statistical program from the Australian Bureau of Statistics.
The Commonwealth Bank BSI is obtained by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities. The BSI covers spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines. What does it all mean?
While the latest BSI result is complicated by the early timing of Easter, there are signs of a consolidation in activity levels. The BSI has been slowing over the past four months and mirrors some of the anecdotal evidence across the economy. The risk is that activity levels slow further in the lead up to the Federal Election.
On a positive note the strength in financial markets and stronger Australian dollar will help to boost confidence amongst households.
The Reserve Bank won’t be in a rush to change interest rate settings. However from the Reserve Bank’s perspective the uncomfortably high Aussie dollar has the potential to complicate the rebalancing effort to the nonmining sector. A super-low inflation result next week would certainly have policymakers discussing the merits of another interest rate cut.
Yes, Craig, your index has cratered and Easter does not last for four months.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
