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 now.

Highlights

• Our data mapping suggests that ABS retail trade measure will bounce in June, up 0.5% m/m. If this transpires, it will be the best result for ABS retail trade since February.
• The NAB Cashless Retail Sales Index itself increased by 0.8% m/m in June. On a year on year basis, the index was up 6.1% y/y, which is still well down on the 10% plus annual growth rates seen last year.
• Growth eased across all states and territories last year and early 2019, but the last couple of months have seen some improvement in the state-level data. By industry, growth remains fastest for cafes, restaurants and takeaway on a year on year basis, although recent monthly data for this sector is much more muted.

NAB Chief Economist, Alan Oster commented:

This result – if it is reflected in the ABS data later this month – represents the most encouraging news for the retail sector for several months and indeed is a sign that the Australian consumer is becoming a just a little more confident, albeit from a low base. However, we are still very cautious about the state of the retail sector. Retail remains the weakest performing sector in the June Monthly Business Survey, with reported retail business conditions at a level last seen during the GFC. The survey also reported retail prices showing an outright decline in June.

Our latest economic forecasts suggest that caution in the household sector will persist with slow income growth on the back of weak wage rises, high debt levels and some risk of negative ‘wealth effects’ given declining house prices. Overall, we see the recent tax cuts providing some support to consumption in the near term, though do not see this as a substantial form of stimulus and is unlikely to lead to sustained increases in wage growth and a recovery in household spending growth.

For more information, please see the NAB Cashless Retail Sales Index June 19