Australia: Cashless retail sales index shows a slowdown in December – NAB

The NAB Cashless Retail Sales Index for Australia shows a slowdown in December following a strong November, notes the research team at NAB.

Key Quotes

“Mapping through to the official measure of retail sales suggests a decline of 0.3% in December after a strong 1.2% rise in November to be published by the ABS when released on 6 February. The weaker result this month was driven by declines in household goods related to the introduction of the iPhone (the electronic goods sub-category fell 2.0% mom following a revised 3.8% increase in November), as well as in food, departments stores and ‘other retailing’.”

“We should be cautious about reading too much into monthly movements in NAB’s data and the official ABS measure of retail sales at present. This is due to changing seasonal patterns (in this instance because of the introduction of Black Friday sales to Australia and the timing of the latest iPhone release). The underlying pace of growth however appears reasonable, with average growth in NAB’s Cashless Retail Index of 0.45% in November and December, and the “official” ABS measure expected to average 0.3% m/m.”

“Yearly growth in NAB’s cashless retail index was 8.7% yoy, compared with much slower growth in the ABS measure. NAB’s series does not include cash payments and also includes a larger share of online purchases, a difference which may become even more critical as a greater share of Christmas shopping shifts online.”

“Looking specifically at the NAB Cashless Retail Sales Index, spending at cafes, restaurants & takeaways remains the fastest growing category (16.6% yoy), with spending on ‘other retailing’ strong (9.9% yoy). Spending on household goods has also picked up in recent months (14.4% yoy), and spending on food remains solid (5.5% y/y). Meanwhile, clothing & footwear sales are growing at a meeker rate (2.9% yoy), and growth in department store sales was negative.”

“Spending growth is also relatively broadly-based across the states. NSW (9.1% yoy) and Victoria (8.9% yoy) are the standouts, with Queensland (8.0% yoy), the ACT (7.7% yoy) and South Australia (7.2% yoy) not far behind.  While WA remains the laggard, although the gap has narrowed (5.3% yoy).”

“The NAB Cashless Retail Index is broader than the NAB Online Retail Index and measures all cashless retail spending by consumers using debit and credit cards (both in person and online), BPAY and Paypal.The index is derived from personal transaction data from NAB platforms (around 2 million transactions per day) and offers a 2-3 week lead on ABS retail trade data.”