Australia: Cashless retail sales index reveals a rebound in spending - NAB

NAB’s proprietary indicator of Australian retail sales, the NAB Cashless Retail Sales Index, reveals a rebound in spending in the month of September, notes the analysis team at NAB.

Key Quotes

“Despite the pickup in the month of September however, there has been a clear slowing over the past three months which has seen the yearly growth rate drop to 5.5% in September, from 6.4% in August and 8.0% in July (in seasonally adjusted terms).”

“The pickup in NAB’s Cashless Retail Sales Index in September follows a contraction in August (although the magnitude of the decline is not as large following revisions). Based on movements in NAB’s data and our data mapping techniques, ABS retail trade is expected to rise by 0.6% mom in September which would reverse the published 0.6% decline in August.”

“While most categories improved in the month (albeit often to still negative reads), the largest increase in the month was in the volatile department store category. Meanwhile, yearly growth in the NAB Cashless Retail Index is down across most categories in the past four/five months. It is particularly feeble for clothing & footwear (1.1% yoy seasonally adjusted) and household goods (1.6% yoy). Spending at cafes, restaurants & takeaways has also eased back sharply but remains strong (8.1% yoy).”  

“The slowing in recent months has also evident across all states and territories, although yearly spending growth strongest in the ACT (7.5% yoy) and NSW (6.5%). Spending growth is also reasonably strong in South Australia (5.5% yoy), Queensland (5.3% yoy and Victoria (5.0%), but very weak in WA (1.3% 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. Cashless sales to consumers have been growing much more rapidly than the ABS measure of retail sales in recent years (6.4% yoy in August versus 2.1% yoy), although the gap in growth rates has narrowed. Further convergence is likely as the penetration of online and contactless payment systems reach a limit (reflecting minimum spend requirements for cashless transactions and the existence of a proportion of merchants who deal only in cash).”