(Australian Associated Press)
Australian small business owners have been on a spending spree since Treasurer Joe Hockey unveiled a series of tax cuts in the federal budget.
New figures from the Commonwealth Bank show that sales across the business services sector – which includes items from office furniture to computers and industrial equipment – posted their strongest gains in three years in May.
The 1.9 per cent lift in spending followed Mr Hockey’s budget night pledge on May 12 to allow small businesses to immediately write off asset purchases worth up to $20,000.
The move was part of a $5.5 billion support package for small businesses designed to boost spending and confidence.
The rise in spending in the business services sector helped drive a rise in the Commonwealth Bank’s Business Sales Index for May.
The BSI, which tracks credit and debit card transactions made on CBA machines, rose a seasonally adjusted 1.0 per cent in the month – its third straight monthly increase.
The annual growth rate of spending was 8.4 per cent, a six-month high.
CommSec chief economist Craig James says the budget’s stimulus measures appear to have been embraced by small businesses.
“If the encouraging sales trends are reflected in other surveys and reports then the Reserve Bank – and the federal government – will breathe a sigh of relief,” he said.
“Because while consumer spending remains healthy, businesses have been reluctant to spend for much of the past year.”
During the month, there was also a boost in spending on government services, entertainment and in the “miscellaneous stores” segment.
Spending fell in just two of the 19 industry sectors, airlines and mail order/telephone order providers.
The BSI covers spending broadly across the economy, including outlay on cars, personal services, utilities and supermarket goods.