Consumer spending falls again

20 Sep 2012, 7:09 am   -   Source: AAP
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The weak July and August results follow a 10.1 per cent rise in sales in the year to June, suggesting consumer confidence has taken a hit in recent months. (AAP)

The weak July and August results follow a 10.1 per cent rise in sales in the year to June, suggesting consumer confidence has taken a hit in recent months. (AAP)

Consumer spending fell again in August, according to the Commonwealth Bank's Business Sales Indicator.

Cautious consumers are keeping their wallets firmly shut and business needs to adapt to this new-found frugality, the Commonwealth Bank of Australia (CBA) says.

The CBA's latest business sales indicator (BSI), published on Thursday found that consumer spending dipped 0.4 per cent in August, in seasonally adjusted terms, following a 5.4 per cent plunge the previous month.

The BSI tracks the value of credit and debit card transactions through Commonwealth Bank point-of-sale terminals, which make up 30 per cent of the Australian market.

The weak July and August results follow a 10.1 per cent rise in sales in the year to June, suggesting consumer confidence has taken a hit in recent months.

CBA acting executive general manager for local business banking Gary McGrath said the BSI showed already-cautious consumers were becoming even more conservative.

"Even though our economy is in good shape, consumers overall don't see the need to spend and they aren't being given any reason to do so, meaning it's more than likely they will continue to hold on to their money," Mr McGrath said in a statement.

He said business needed to adapt to the current environment by cutting costs and focusing on productivity.

CommSec chief economist Craig James said businesses that were able to understand current spending patterns and respond accordingly could continue to thrive.

"Those that can adapt and tailor their offers for these individuals are those that will ultimately still perform strongly in this market," he said.

Half of the 20 industries covered by the BSI in August reported spending falls, with government services, down 1.7 per cent and transportation and vehicles 1.4 per cent weaker.

The falls were offset partially by a 1.3 per cent rise in sales for mail order and telephone order providers and a 1.1 per cent lift for wholesale distributors and manufacturers.

NSW was the weakest state, with sales down 1.0 per cent, while the Northern Territory was the strongest, up 0.9 per cent.

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