The Commonwealth Bank has tracked an ongoing lift in consumer spending, sparking hope for a return to retail growth. The bank tracked a 1.9 per cent increase in spending in May, the third increase in sales in the past four months.

 

The Business Sales Indicator uses key indices to track spending, including transactions processed through Commonwealth Bank point-of-sale terminals, which represent 30 per cent of the market.

 

“The momentum we have experienced this year demonstrates that small increases in confidence can translate to consumers’ willingness to spend. The May results factor in the RBA’s larger-than-expected decision to lower the cash rate for the first time in 2012 and that has clearly had an effect on the amount of money being spent at businesses across the country,” Matt Comyn, Executive General Manager, Local Business Banking, Commonwealth Bank said.

 

“The results recorded in May are therefore promising for Aussie businesses – particularly based on other positive news for the economy this month – and point towards what is hoped to be continued growth in consumer spending. However, the overall story hasn’t changed and despite stronger fundamentals at home, rocky overseas markets are continuing to dent local consumer confidence.”

 

Despite the upbeat results, Commsec’s Chief Economist, Craig James, urged caution, adding that the results may be misleading.

 

“We saw a 1.9 per cent increase in seasonally adjusted terms this month, which is a solid growth. However, this is yet to flow through on our trend estimates, with the BSI posting the slowest trend growth rate in nine months,” said Mr James.

 

“Consumer confidence is still fragile, due mainly to international factors and general uncertainty about a number of domestic economic issues. So while spending is continuing to rise, there is still uncertainty about whether momentum will be maintained.”

 

Despite a generally gloomy outlook in the retail sector, spending is up 5.9 per cent over a year ago.