Highlights

• Our data mapping points to the ABS retail sales measure rising substantially in November – up 3.0% m/m in our estimation. The ABS measure rose 1.4% in October, while we forecast 1.2% at the time (since revised to 1.7%).
• Two key forces have likely driven our strong expectation for retail sales in November: Victoria’s emergence from restrictions and the Black Friday/Cyber Monday sales, which are unlikely to be fully captured in the ABS seasonal factors. That said, we see some signs that the Black Friday sales growth was a little slower in 2020. Victorian retail sales have now almost caught up with New South Wales and Queensland on a year ended basis.

NAB Chief Economist, Alan Oster commented

Last month, as Victorian restrictions eased, we wrote that “we expect that Victorian data will begin to converge with the rest of Australia in November”. The results in November suggest that Victoria’s convergence has been incredibly rapid, particularly given that most Melbourne retail and hospitality only reopened on 27 October and the “ring of steel” separating Melbourne from regional Victoria only fell on 9 November. Victorian retail sales are now tracking only just behind New South Wales and Queensland on a year ended basis. Western Australia remains the strongest performer, but other states are catching up. South Australia saw weaker growth in November, reflecting their coronavirus outbreak and subsequent (brief) lockdown. With that outbreak now controlled, South Australia will likely rebound quickly.

Recent retail sector resilience has been remarkable, but growth has been unequal. Clothing and footwear and hospitality have been hit hard, but are now seeing some recovery. While food is losing some of its momentum (perhaps from Victorians dining out more). Household goods, department stores and other retailing saw a jump in November. Beyond differences between sectors or states, there have been large changes within cities: many CBD workers are now working from home and spending either locally or online. On Thursday this week we will provide a breakdown in the changing trends between the city and the suburbs for Melbourne and Sydney, using NAB spending data.

For more information, please see the NAB Cashless Retail Sales Index November 2020