Bond markets have been supported by some market-friendly data and while Fed speakers were again mixed, it was the more dovish remarks that captured attention.
NAB Online Retail Sales Index: December 2020
The NAB Online Retail Sales Index contracted in December, after moderate growth in November.
The NAB Online Retail Sales Index contracted in December (-7.1%), from growth in November (1.3%), on a month-on-month, seasonally adjusted basis.
- In year-on-year terms, the growth in the NAB Online Retail Sales Index has slowed (33.8% y/y) from the record growth between April and November, but remains elevated relative to recent years.
- Takeaway food, and grocery and liquor, were the only categories to record growth in seasonally adjusted month-on-month terms. The biggest fall in month-on-month growth was recorded for the largest category, homewares and appliances, which contributed heavily to the headline result. This category, however, is still up 23.2% for the year. Other large categories, department stores, personal and recreational, and fashion, also contracted along with smaller categories, games and toys, and media. Grocery returned to growth in December after contracting over the past three months.
- In month-on-month terms, SA, which recorded the strongest monthly sales growth in November, contracted heavily in December, along with TAS, and ACT. While all states contracted in the month, sales growth contraction for NSW, WA, and NT was better than the national average. In year-on-year terms, VIC still leads, along with other large sales state NSW. Online sales for Vic are now about one and a half times what they were for the same month 2019.
- After strong growth in November, regional areas recorded a larger contraction in December, relative to metro areas. The results were quite mixed, even within states, with metro VIC performing better than the rest, along with metro NSW, but regional VIC the worst performing. TAS was the only state where metro sales contraction was worse than regional areas.
- Sales growth for both domestic and international merchants contracted in month-on-month terms, with domestic online retailers weaker, after outperforming international in November. In line with headline categories, grocery and liquor, and takeaway, were the only categories to record growth for domestic, while sales growth was only positive for international media.
- We estimate that in the 12 months to December, Australians spent $44.18 billion on online retail, a level that is around 12.6% of the total retail trade estimate (Preliminary Dec 2020, Series 8501, Australian Bureau of Statistics), and about 44.4% higher than the 12 months to December 2019.
NAB Chief Economist, Alan Oster commented:
In month-on-month terms, our NAB Online Retail Sales Index contracted in December, after moderate growth in November. When comparing this December to 2019, i.e. in year-on-year terms, the index continues to grow strongly. However, this rate of growth has slowed from the rapid growth between April and November (50% to 60%), to around the rate last recorded in March (~30%). It is likely that a few factors contributed to the sales volatility of the past few months. October monthly online sales contracted relative to September, as lockdowns ended and sales growth returned to instore. It’s also possible that some spending was postponed in anticipation of the November sales events. The rebound in November appears to be driven by the sales events, with particularly strong growth for those in regional areas. It’s worth noting though, that the increase in sales in November seems to have been mostly driven by a boost to average spend per transaction, as the total volume of transactions were lower than the same monthly change period 2019. Despite the monthly growth from October to November being more moderate relative to the same period 2019, the post sales slowdown in December for online was much larger in 2020. This might partly be due to the base effect from rapid growth for most of 2020, appearing more stark when growth moderates.
Not every category contracted in December. Food still played a major role in the festive season, whether it came in the form of delivered meals in takeaway food or by online ordering of grocery and liquor. With the exception of the immediate post lockdown period between September and November, the latter category, with the second largest online sales volumes, has generally recorded rapid growth over the past 18 months. Growth for grocery and liquor was not uniform in December, with an expansion in NSW, ACT, NT and TAS partly offset by a contraction in the other states. For smallest sales category, takeaway food, such high growth has resulted in a larger share of online sales. A year ago, this category represented about 3.8% of the index, but with rapid growth over the past year, it now represents about 5.2%. After strong growth last month, the largest sales category, homewares and appliances, contracted significantly in December, across all states and territories. But it is worth putting this months number in perspective, as the category is still up 23.2% compared to the same month 2019.
Overall growth contracted across all states and territories in December, on a month-on-month basis, with TAS fairing worst. The apple isle also recorded the slowest growth over the year, but this slump appears to be Hobart based, with regional areas performing better. NT followed on from strong growth last month, to lead sales growth in October, though it remains the slowest in year-on-year terms. Of the large sales states, NSW contracted the least, with metro area growth rate on par with VIC. However, VIC regional areas recorded a much larger contraction, contributing to the headline result for that state. VIC has recorded a contraction in sales in each of the past three months, coinciding with the reopening of physical stores. But in year-on-year terms, the state’s growth remains the strongest, so it is more likely that the recent contraction is a result of the large base effect from extraordinary growth mid-year.
For further details, please see the NAB Online Retail Sales Index December 2020