Last week I was in the Baytree, an upmarket homewares shop in Sydney’s east, described on Facebook as “an institution in kitchenware and dining, a mecca to delight every cook.”. Owned for many years by a long-standing friend of mine, who works tirelessly like most small business owners, Susan went through the movement from store to online shopping, braved the challenges that the GFC put before us, battled gruesome landlords and engaged in the endless search for great staff. And she lives to tell the tale, one that has seen a smile on her face of late. When I asked her how business was, she nodded continuously and said, for the first time in few years, “Great.” And with more nodding. “Yes, great.”
One swallow doesn’t a summer make, that’s true. But this morning I opened my emails to find a report out from the Commonwealth bank that led with the title “Firm spending in the lead-up to Christmas.”
In the last few days, like me, you might have noticed that shoppers are out there engaging in Christmas festivities. Hairdressers are booked out (I know this because the recent humidity has turned my mop into a ball of frizz and I’m needing some help on this front). Restaurants have no space. Have you tried to book an airline flight recently? Good luck! Cabs whizz by and shops are full of people, if not buying then at least browsing.
“Consumers and businesses continue to spend. The strength of the broader economy, especially the job market, is supporting spending as is positive sentiment and benign inflation,” the Commonwealth Bank Business Sales Indicator (BSI) reported.
“The growth pace started lifting in March 2017 and over the period from November 2017 to July 2018 the BSI consistently recorded monthly gains of between 0.9-1.3% a month. Growth in sales has held between 0.6-0.8% a month for the past four months, still above the long-term average pace of 0.4%,” it went on.
The BSI is obtained by tracking the value of credit and debit card transactions processed through the Commonwealth Bank merchant facilities. It includes transactions made at traditional retail establishments such as supermarkets, clothing stores and cafes and restaurants. The Indicator also covers businesses such as airlines, car dealers and utilities such as water and electricity companies as well as motels, business, professional and government services and wholesalers. So it’s fairly comprehensive and more regular.
Hopefully, retailers are encouraged by recent spending trends in the lead-up to Christmas. And while you might think this buoyancy will put pressure on domestic interest rates to rise, AMP is still of the belief that the next movement in rates will be down, while CommSec continues to expect stable interest rate settings until late in 2019.