• On a month-on-month, seasonally adjusted basis, the return to growth observed from September ended in December, with a sizeable contraction (-4.6%) erasing part, but not all, of November’s gain.
• In year-on-year terms, the contraction, which had eased in November, worsened in December (-2.5% y/y), albeit not to the extent of the double-digit extent observed between August and October.

• Two categories, takeaway food, and media defied the overall result by recording growth. These categories, which represent a smaller share of online retail, were insufficient to offset the fall in larger sales categories. Weakness in the monthly result was more pronounced in homewares and appliances, fashion, and department stores, which make up about half the index. This partly retraced the gains in October and November. In year-on-year terms, media, takeaway food, department stores, and games and toys continue to grow.
• After strong growth in November, particularly for the two largest sales states, VIC and NSW, monthly growth contracted in December. Larger contractions were recorded for WA, ACT, and NT, while VIC and TAS fared better. The milder contraction in December for VIC follows on from that state recording the highest growth in November (11.2% mom, s.a.), relative to the other states. In year-on-year terms, the much larger contraction in NSW, SA and ACT weighed more heavily on the index relative to smaller falls in VIC, QLD and WA, and growth for TAS.
• While metro areas observed the largest gains in November, their contraction in December was only slightly worse than sales in regional areas. Metro VIC led sales growth in November (14.7% mom, s.a.) and recorded a contraction slightly better than the overall in December. In year-on-year terms, regional areas performed slightly better. This was the case in most states except WA and TAS. The large contraction in NSW was heavily influenced by the metro result, while in SA, regional areas recorded strong growth.
• A contraction in growth for both domestic and international retailers in the month, with the latter continuing to record growth in year-on-year terms. It is worth noting here that result (y/y) for international merchants is influenced heavily by the base effects of 2021.
• NAB estimates that in the 12 months to December, Australians spent $53.26 billion on online retail, a level that is around 13% of the total retail trade estimate (November 2022, Series 8501, Australian Bureau of Statistics), and almost flat relative to the 12 months to December 2021.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, growth in the NAB Online Retail Sales Index contracted after two months of growth in October and November. If we take a quarterly view to look through the monthly volatility, the result for Q4 relative to Q3 is positive, up circa 4.4%. This however is nominal, so it’s worth noting that price effects are impacting the result. In year-on-year terms, the base effects of the past two years are beginning to somewhat ease, with the growth rate levelling off after tanking in Q3.  Although the year-on-year rate appears to be stabilising, cost of living pressures, driven by strong inflation and the impact of higher interest rates, are also likely to temper any resurgence.

Both VIC and NSW exited lockdowns in October 2021, with the subsequent months for NSW remaining elevated, i.e. longer to return to a more ‘normal’ rate. Therefore, base effects for NSW in year-on-year are still clearly playing a part for that state, given the far milder contraction in VIC and other large sales states.

By category this month, there was a significant drop in the largest sales category, homewares and appliances. If we add the result from October and November, this sector is up compared to the September quarter, but the year-on-year decline is still negative, albeit, somewhat stabilising.

This month we take a brief look at the activity surrounding the Black Friday to Cyber Monday sales event. What we generally observe is that the event continues to grow. However, we also observe that the growth rate, when compared to prior years, reached a highpoint in 2019, with every subsequent year slower, including the pandemic period.

Get all the insights in the NAB Online Retail Sales Index (December 2022)