Spending across the economy has grown at its slowest pace in 10 months, showing confidence remains subdued.
Economy-wide spending lifted 0.2 per cent, in trend terms, its slowest pace since September last year, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
But in seasonally-adjusted terms, described by CBA as being more volatile, spending fell by two per cent in July, following a 2.1 per cent fall in June, although annual growth had lifted to 6.9 per cent last month.
CommSec chief economist Craig James said the index, which tracks spending by business and government as well as consumers, showed businesses were still operating in a subdued environment.
He said consumers were responding, although modestly, to record-low interest rates.
"Consumers are spending but it is more on services and goods from abroad rather than at Australian `brick and mortar' stores," Mr James said.
"The low inflation environment ensures that the Reserve Bank can maintain an easing bias, however the urgency for another rate cut has clearly lessened following the recent rate cut, weaker currency and upcoming election.
"If the RBA decides to cut rates again, it will be prompted by the cautiousness of business.
"Australian businesses are reluctant to spend, invest or employ until the election is held."
Mr James said businesses should be encouraged by the RBA's August cash rate cut as well as recent strength in new housing developments and modest improvement in the manufacturing sector.
