Overall business sales slowed at the start of winter in June, which saw the weakest growth rate since February 2017, according to the Commonwealth Bank.
The bank’s monthly Business Sales Indicator, released on Monday, revealed a flat month in trend terms, and a 1.1 per cent decrease in sales in seasonal terms – the first decline in six months.
According to the Index, the onset of cold weather and slowing consumer confidence discouraged Aussies from venturing out in June.
The annual sales growth trend also fell from 4.6 per cent to 4.1 per cent, well below the 5.5 per cent long term average and the slowest growth in 19 months.
Sales in the retail sector remained flat during the period.
“Both consumer and business sentiment have been choppy in recent months, but combined stimulus from interest rate and tax cuts are expected to boost spending in the coming months,” CommSec economist Ryan Felsman said.
“Department stores, clothing retailers, cafes, restaurants, travel agencies, and airlines are all likely to benefit from increased spending.”
The states of Victoria and Tasmania both saw spending increases during the month of 0.4 per cent, while the Northern Territory rose 0.3 per cent and South Australia rose 0.2 per cent. Spending remained flat in the ACT and Queensland, and fell 0.1 per cent in New South Wales, and 0.2 per cent in Western Australia.
Confidence down after election sugar hit
These findings correlate with the recent findings from NAB chief economist Alan Oster, who noted that despite a short spike in business confidence due to the Coalition’s election win, retail returned to GFC-level conditions in the month of June.
Oster said it is unlikely that conditions or confidence will improve over the next few months.
The recent cash rate cut, as well as the Coalition’s recently passed tax package, were expected to increase customer confidence – though seemed to have the opposite effect, according to the most recent ANZ-Roy Morgan Australian Consumer Confidence report.
“Confidence fell 1.1 per cent, despite the RBA’s second rate cut. The passage of the tax cuts has also not been an immediate boost to sentiment,” said ANZ head of Australian economics David Plank.
“Interestingly, confidence also fell immediately following the June RBA rate cut, suggesting the immediate take-away from monetary easing is not necessarily positive.”
Plank put the fall into context, however, noting that the prior week had seen a 4 per cent increase, and that some consolidation is not “entirely unexpected”.
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