Below trend growth to continue
In month-on-month terms, our NAB Online Retail Sales Index contracted again in December.
NAB Chief Economist, Alan Oster commented:
In month-on-month terms, our NAB Online Retail Sales Index contracted again in December. It is worth noting that these recent monthly contractions are following on from the exceptionally strong ‘lockdown enhanced’ growth in the third quarter of 2021. Heightened seasonality is also playing a role in the monthly numbers. The seasonal factors for October and November were slightly larger this year, indicating the growing importance of two key months in the online retail calendar. Even with the monthly contractions in growth, comparing this period to the same period 2020, i.e. in year-on-year terms, the index continues to grow. Given that the base of November and December 2020 had already grown 55% and 40% year-on-year terms respectively, the share of online retail sales continued to increase.
The contraction in monthly online sales in December was driven by the ACT, NSW, and TAS. The former two had recorded strong online sales growth during the lockdown periods in Q3, and the current monthly result is likely to be partially reflective of an easing in restrictions during Q4. In year-on-year terms, while all states except TAS were positive, ACT still leads (15.5%), but this is some way from its recent peak (85.6% in September). From the recent results it’s clear that, absent any key disruptions, online will continue to moderate.
By category, supermarkets returned to moderate monthly growth after three prior months of contraction. The weak period for this category in month-on-month terms can be partly attributed to the elevated period in the third quarter of the year. Given their strong year-on-year performance, grocery and liquor, and department stores have contributed beyond their share of index sales to the growth in the overall online index. In contrast, in 12-months-to terms, the biggest sales category, homewares and appliances, has contributed less than its share in the index. This is also noted in their respective share in the index compared to 12 months prior, with the former categories increasing their share of the online index, while the latter has decreased.
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