March 18, 2020

NAB Cashless Retail Sales Index: February 2020

Our forecast points to a substantial rise in the ABS retail sales measure in February (+0.6% m/m), but there is very little to celebrate.

This month we continue our podcast series to accompany the NAB Cashless Retail Sales Index. In this short podcast, you’ll get a quick summary of the major drivers of the index this month. Listen now.


  • Our data mapping suggests that the ABS retail trade measure will rise 0.6% m/m in February. The ABS printed a 0.3% fall in January, while we forecast +0.2%.
  • This result is higher than might have been expected given the strain on the Australian economy following bushfires and the COVID-19 Coronavirus pandemic. There are three potential factors underlying this result. Firstly, January was a very weak month due to the fires, and the first part of February likely saw a return to something resembling normality for parts of the retail sector (although this has now dissipated). Secondly, the ABS seasonal factors are potentially lagging changed consumption trends. Thirdly, by late February, spending at supermarkets was beginning to ramp up in response to Coronavirus, although the major ramp-up didn’t begin until March.
  • While it is only just over half way through the month, it looks clear that spending on food and other supermarket items will surge in March, reflecting massive buying activity by consumers in response to Coronavirus. Other parts of retail, particularly associated with tourism or hospitality, are likely to plummet.

NAB Chief Economist, Alan Oster commented:

Our forecast points to a substantial rise in the ABS retail sales measure in February (+0.6% m/m), but there is very little to celebrate. Early February probably saw a brief respite between the bushfires crisis and the Coronavirus crisis, but the situation has changed now. Panic buying has now set in at supermarkets across Australia. While this will boost the headline retail sales figure in March, other retail sectors and consumption spend more generally in areas such as health, education, restaurants and other services – including airlines face massive challenges.

Last week, the Commonwealth government has announced a substantial fiscal stimulus of $18b (0.9% of GDP) to support the economy in the face of the Coronavirus outbreak. It is likely however, that further stimulus will be required to support the economy – possibly as early as later this week. The RBA will announce further policy measures tomorrow, suggesting that an inter-meeting cut is increasingly likely. The RBA has also announced it is ready to buy bonds to support the economy. While these measures should support demand, there will be ongoing supply issues as Coronavirus progressively shuts parts of the global supply chain. While China is now going back to work, it is not clear that other parts of the world will be able to keep supply online.

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