• Growth rebounded for the NAB Online Retail Sales Index in May (2.7%), following on from a revised contraction in April (-3.5%, previously -3.7%), on a month-on-month, seasonally adjusted basis.
• In year-on-year terms, the growth in the NAB Online Retail Sales Index accelerated in May (6.8% y/y), albeit not at the double-digit pace recorded prior to April. The base effects from the high sales growth period of 2020 are now evident in the year-on-year comparisons. The moderating influence on growth by base effects this month was tempered by the early effects of the lockdown in Victoria, which began 28^th May. 

• Growth was recorded in month-on-month terms, for five of eight categories. Takeaway food, and media, which were the only categories to grow last month, contracted in May, along with fashion. The largest sales category, homewares and appliances, returned to growth in May, albeit slightly slower than the overall index, ending three months of contraction. Personal and recreational goods, department stores, and grocery and liquor recorded faster growth. Takeaway food still leads in year-on-year terms, although department stores is not far behind.
• In month-on-month terms, after a large contraction a month prior, online retail sales in VIC rebounded rapidly in May. Strong growth was also recorded for NT, NSW and SA. Online department store sales in April were weakest in VIC, but are now strongest in May. While all states saw a contraction in media sales for the month, the contraction in growth for takeaway food was not uniform, with QLD and NT recording growth for this category.
• Monthly growth in online sales was slightly higher in Metro areas, with VIC and WA key drivers. For NSW, and SA however, regional growth was stronger than metro. In year-on-year terms, metro and regional WA, and QLD regional, now outpace other areas.
• Sales growth as recorded for domestic merchants, while international merchants contracted in month-on-month terms. Sales growth for international merchants was weaker in all categories except media, games and toys, and takeaway food.

• We estimate that in the 12 months to May, Australians spent $48.1 billion on online retail, a level that is around 13.2% of the total retail trade estimate (Preliminary May 2021, Series 8501, Australian Bureau of Statistics), and about 38.4% higher than the 12 months to May 2020.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index grew in May, after a contraction in April. When comparing this May to 2020, i.e. in year-on-year terms, growth, while slower than much of the past year, accelerated in May. While year-on-year growth is still trending lower given base effects from 2020 (May 2020 was +52.4%(y/y)), growth this month partly stemmed this slowing.

Growth in monthly sales in May was driven by VIC. While VIC’s growth is partly a rebound from last months contraction, it is likely that, albeit only a few days are included in the data, lockdown, and concerns pre-lockdown, contributed. VIC led sales growth in department stores, and was strong in other key segments like grocery and liquor, and games and toys. Interestingly, for a state entering lockdown, growth for takeaway food contracted along with most other states. We will have to wait until we have June data, but broadly what we observed in the early stages of the pandemic in 2020 was a reluctance for takeaway food in early periods, with a preference for grocery and liquor during periods of shutdown. In year-on-year terms, the personal and recreational goods, and homewares and appliances categories continued to contract. However, base effects are playing a part here, as this is a comparison to a period where the category recorded strong growth.

In month-on-month terms, growth retuned for both metro and regional areas, with growth slightly faster for the former. Metro VIC clearly jumped, while growth in NSW appears primarily from regional areas. In year-on-year terms however, metro growth is stronger across most states.

In month-on-month growth terms, domestic merchants recorded growth, particularly in categories like homewares and appliances, while sales at international merchants contracted. Games and Toys, and Media were the only key categories where international recorded growth above domestic. Takeaway food was also higher for international, though this is a small share of category spend.

For further details, please see the NAB Online Retail Sales Index May 2021