Cashless Retail Sales Index: October 2021

Retail conditions in lockdown-affected areas have clearly been challenging for many businesses, but with reopening here, consumers are bouncing back and spending has returned.

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Highlights

  • Our data mapping points to an ongoing retail rebound in October. We see the official ABS measure gaining 2.8% on a month-on-month basis. Retail sales rose 1.3% in September – we forecast a 2.2% gain at the time, since revised to 2.0%.
  • October’s results clearly reflect the unwinding of lockdowns in New South Wales and (later in the month) Victoria and the ACT. Higher frequency weekly data suggest that NSW and Victoria started their retail sales gains before lockdowns ended, with lockdown end coinciding with another step-up, especially in hospitality.
  • Last month, we flagged some uncertainty about whether consumers would “snap back” to the same extent as previous reopenings with the virus circulating in the community this time. However, we are pleased to say that these concerns have proven unfounded, at least so far.

NAB Chief Economist, Alan Oster commented

Retail conditions in lockdown-affected areas have clearly been challenging for many businesses, but with reopening here, consumers are bouncing back and spending has returned. With NSW, Victoria and the ACT only out of lockdown for part of October, further upside is highly likely in November.

The NAB Monthly Business Survey for October, released yesterday, showed rising business conditions and confidence – the former principally in NSW and the latter principally in Victoria, mirroring the NSW rise in confidence the month prior. Retail, business, finance & property, and personal & recreation services all saw large confidence gains.

How does this impact our broader view for late 2021 and into 2022? Certainly these results suggest ongoing recovery from the pandemic. There are some signs of retail price pressures, but little to suggest a breakout beyond the RBA’s target band at this stage. It remains unclear whether the lockdown-induced online retail surge continues at the expense of bricks and mortar stores. Ultimately this is a compositional question, not a reflection on the strength of overall consumer spending. We will have a better read on these potential trends in coming weeks and months.

For more information, please see the NAB Cashless Retail Sales Index (October 2021)