Cashless Retail Sales Index: October 2020
The retail sector has proven to be very resilient this year, although many consumers have changed their spending behaviour, leading to a boom for some retailers and bust for others.
This month we continue our podcast series to accompany the NAB Cashless Retail Sales Index. It’s a short, 10 minute podcast, designed to give you a quick summary of the major drivers of the index this month. Listen to the full podcast now. If listening on a mobile device, click listen in browser.
- Our data mapping points to the ABS retail sales measure rising 1.2% in October. The ABS measure fell 1.1% in September, a substantially weaker result than our forecast of +1.9% (since revised to 0.8%).
- Victoria remained the weakest performing state in October, although most retail and hospitality did not reopen in Melbourne until 27 October. We expect that Victorian data will begin to converge with the rest of Australia in November.
- While retail sales have been more resilient than many expected this year, the last two ABS prints have seen negative monthly growth. While our data shows an improvement in October, and better Victorian data should boost the national headline in coming months, we remain concerned that in a weak growth environment, retail will face ongoing challenges.
NAB Chief Economist, Alan Oster commented
The retail sector has proven to be very resilient this year, although many consumers have changed their spending behaviour, leading to a boom for some retailers and bust for others. Businesses in CBDs, clothing and footwear retailers, hospitality and businesses dependent on international tourism have all faced major challenges.
The massive financial support provided by government has allowed many consumers to keep spending. However, this support is being gradually wound back despite unemployment remaining at an elevated level. NAB’s latest monthly business survey shows that while confidence has jumped, business conditions remain challenging, driven in part by weak employment.
With signs that outperforming retail sectors household goods and other retailing have peaked, we expect the sector to face ongoing pressure into 2021 as support decreases. The hospitality sector has been under pressure, particularly in Victoria, but if good coronavirus outcomes continue, there is a possibility of some upside driven by increased domestic tourism.
For more information, please see the NAB Cashless Retail Sales Index October 2020