• The NAB Cashless Retail Sales Index was weaker in April, down 0.6% on a month on month basis in March. This is the weakest result since December 2017 and arguably more concerning given December was affected by a strong November print. Generally most sectors were weak in April, with only cafes, restaurants and takeaway and department stores recording a month on month gain. Food recorded the weakest result, followed by clothing and footwear. Our data mapping yields a forecast of -0.2% m/m for the official ABS measure of retail sales in April. Our March estimate was revised up from 0.2% to 0.4% (compared to the flat ABS print).
• The data remains more encouraging on a year on year basis, with the NAB Cashless Retail Sales Index up 9.3% in April, although this was distorted by special factors (iPhone X and Black Friday) in late 2017.
  
• Year on year growth was positive for all six NAB Cashless Retail Index major industry groupings, although the growth rate slowed across all but one. Spending at cafes, restaurants & takeaways remains the fastest growing category (15.6% y/y). Other retailing was the next strongest at 10.5% y/y, with household goods also strong at 9.7% y/y. Food sales growth stood at 6.2% – the worst result for the category since October. Department stores grew 4.0% y/y while clothing & footwear sales growth continues to lag; only managing 3.9% y/y growth in April.  For more detail see Charts 3, 7 & 8.
• Looking across Australia, year on year growth remains positive, but was slower in every state. New South Wales posted the strongest result (up 9.8% y/y s.a.), closely followed by Victoria and the Australian Capital Territory (9.7%). South Australia was up 8.6% and Western Australia 8.4%. Queensland has now been overtaken by Western Australia and recorded the weakest growth of 6.7% in April.
• The NAB Cashless Retail Index is broader than the NAB Online Retail Index and measures all cashless retail spending by consumers using debit and credit cards (both in person and online), BPAY and Paypal. The index is derived from personal transaction data from NAB platforms (around 2 million transactions per day) and offers a 2-3 week lead on ABS retail trade data. Likely reflecting the increasing popularity of online and contactless payments, the NAB Cashless Retail Index has continued to outpace the ABS measure of retail sales (11.9% y/y versus 3.1% y/y in March)

NAB Chief Economist, Alan Oster commented:

“The NAB Cashless Retail Sales Index for April recorded a negative month on month result (-0.6%) for the first time this year and our mapping of the “official” ABS measure points to a fall of 0.2% m/m. This is the first drop since December 2017, which followed a very strong November. More concerningly the April result comes after a flat ABS read in March.

“While the monthly data are volatile, our latest Monthly Business Survey also showed retail business conditions turning negative in April for the first time this year, further suggesting that the retail sector is losing momentum again.

“Four out of six sectors fell on a month on month basis, with only cafes, restaurants and takeaway and department stores recording growth. Annual growth remained positive, although the rate of growth slowed across the board. Overall, the NAB Cashless Retail Sales Index was up 9.3% y/y in April.

“Across Australia, New South Wales retains top spot on an annual basis, followed by Victoria and the Australian Capital Territory. Western Australia was the only state to enjoy a higher growth rate in April and has overtaken Queensland, which is now the slowest-growing state.

“NAB’s index is derived from personal transaction data from NAB platforms (around 2 million transactions per day) and includes all cashless retail spending by consumers using debit and credit cards (both in person and online), BPAY and Paypal. NAB’s Cashless Retail Index is reasonably assumed to be representative of aggregate non-cash retail sales in Australia given its large sample size. The average growth rate for NAB’s index is stronger than the official ABS measure of retail trade given that it does not capture cash transactions, which is why we use our mapping equations to forecast the official ABS measure of retail trade. RBA research suggests 18% of the value of retail trade occurred via cash in 2016. Over time, the growth rates of the two series are likely to come together.”

For more information, please refer to the attached report:

• NAB Cashless Retail Sales Index: April 2018 (PDF, 114KB)