Growth, inflation and labour market all easing
The NAB Cashless Retail Sales Index grew 1.2% on a month on month basis in March – slower than January or February.
“Annual growth in cashless sales improved again this month, with NAB’s Cashless Retail Index seeing growth of 11.5% y/y in March, up from 10.6% in February. This is the fastest rate since late 2015. Monthly data, which it must be said is much more volatile, slowed to 1.2% m/m, down from 1.4% in February.
“Our mapping of the “official” ABS measure also implies a relatively flat outcome in March. That is mapping equations suggest monthly growth of 0.2% March, compared to our forecast last month of 0.7% m/m. While the latter was close to the February ABS print of 0.6% y/y, it is important note the divergence in the two series at the start of the year. In March most sectors were weak – especially cafes restaurants and takeaway and household goods. Department stores were, however, reasonably strong.
“Turning to our spending data, annual growth has been higher across Australia, with South Australia claiming top spot, followed by New South Wales, the Australian Capital Territory and Victoria. Western Australia saw the slowest growth in March, followed closely by Queensland.
“The retail sector is still underperforming compared with other industries, although the March NAB Monthly Business Survey saw the sector record its best business conditions result in 9 months on a trend basis. Retail confidence was down slightly on a trend basis in March but was still at +10. Consumers remain cautious in the face of higher electricity prices, low wages growth, stalling house price wealth and high debt levels.
“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.”
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