• On a month-on-month, seasonally adjusted basis, growth accelerated rapidly in May (3.7%) after an upwardly revised result for April (0.2%, was flat 0.0%).
• In year-on-year terms, the contraction in growth that has occurred over the past year ended in May, with a return to growth (4.9% y/y).
• All categories, except media, recorded growth in the month, with a particularly strong rebound in the largest category, homewares and appliances, along with fashion, and department stores. Personal and recreational goods also recorded strong growth, accelerating in the month. In year-on-year terms however, the largest sales category continued to contract, albeit at a much slower pace. This contraction was at odds with all other categories, except department stores, which was flat.
• All states and territories recorded growth this month, with SA leading. The largest sales states, VIC and NSW, recorded slightly slower growth, but within range of the overall index. The return to growth was also observed in year-on-year terms, with all states recording growth as the base effects of the pandemic period dissipate.
• Metro areas generally fared better in the month, with growth above the overall, while regional areas were slightly below. Both, however, accelerated in the month. Similar result in year-on-year terms, with both metro and regional areas returning to growth.
• The acceleration in growth for the month was driven by a rebound for domestic retailers. While international also recorded growth, the rate was much slower than the overall. In year-on-year terms, growth for international has outpaced domestic. This is partly due to activity for international retailers which was more subdued during the height of the pandemic period, and the addition of new entrants in the more recent period.
• NAB estimates that in the 12 months to May, Australians spent $53.26 billion on online retail, a level that is around 12.7% of the total retail trade estimate (April 2023, Series 8501, Australian Bureau of Statistics), and a contraction (-5.1%) relative to the 12 months to May 2022.

NAB Chief Economist, Alan Oster commented:

Our NAB Online Retail Sales Index grew rapidly this month, following on from very subdued growth over the past two months. This compares favourably to our broader indicator for total retail which also recorded growth, albeit at a far milder pace (0.5%).

Contributing strongly to the online result were the larger sales categories, fashion, homewares and appliances, and department stores, which recorded significant rebound on the month prior, along with an acceleration for personal and recreational goods. Of these, fashion, and household goods were also strong in the month for our broader measure. However, the department stores category was not aligned, with rapid growth in online, and a contraction in the broader measure. While it could be speculated that this is due to new entrants from international online aggregators, our data suggests that domestic online department store retailers outpaced their international counterparts this month.

It is also worth putting the monthly growth in context. Year-on-year growth returned in May for the first time since May 2022. The past 12 months retraced gains made during the height of the pandemic period. Based on the current results it’s likely that these base effects have now subsided. So, it will take a few more monthly results like May to reverse the decline in the 12 months to metric. In an environment where consumer spending is generally softening, this is made more difficult.

Get all the insights in the NAB Online Retail Sales Index (May 2023)