Below trend growth to continue
NAB Online Retail Sales Index contracted in March, after a revised slight contraction in February.
NAB Chief Economist, Alan Oster commented:
In month-on-month terms, our NAB Online Retail Sales Index contracted in March, after a revised slight contraction in February. When comparing this March to 2020, i.e. in year-on-year terms, growth, while still double digit, is now moderating. Part of this slowdown in year-on-year growth is as a result of the base effects of the initial online spike of March 2020. At that time, online growth accelerated to +30.3%(y/y) and would go higher still by April, as travel and trade restrictions impacted in-store retailing. An element of perspective is advised when interpreting the year-on year results over the next few months.
The contraction in sales this month was driven by a drop in homewares and appliances in most states, along with games and toys, and an even larger drop in personal and recreational goods. All states recorded growth in department stores, with other categories mixed by state. In the sales period post the circuit breaker lockdown for example, VIC and WA grocery and liquor contracted, but grew strongly for other states, especially QLD and SA. The moderating growth in year-on-year terms is no more pronounced than in Victoria, which is now more in line with growth in other large states. Albeit still above the national average, at 31.3% it is some way from the 119.5% growth of August 2020.
At the geographic level, in year-on-year terms, growth for metro and regional areas has somewhat converged, and while Vic still leads metro, the percentage point difference is not as great as it has been.
In month-on-month growth terms, it appears that much of the slowdown has affected domestic retailers more than international, with the latter continuing to grow. Categories like homewares and appliances, that are predominantly domestic, contracted in the past month along with the broader index, while fashion, with a larger international presence, recorded a strong contribution to growth from international retailers. After last months strong growth, international game and toy retailers contracted more than domestic, contributing heavily to the headline result for that category. Over the past year, growth has been driven overwhelmingly by domestic online retailers, but this appears to be slowing.
For further details, please see the NAB Online Retail Sales Index March 2021
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