• On a month-on-month, seasonally adjusted basis, the return to growth observed in September (revised 0.4%, previously 0.2%), strengthened in October (2.2%) after contracting for most of the year.
• In year-on-year terms however, the NAB Online Retail Sales Index recorded another contraction (-11.8% y/y) in October, albeit an improvement on the September result. It is again worth noting this is compared to a period of exceptionally strong growth the year prior (October 2021, 20.6%).

• All categories, except takeaway food, recorded growth in month-on-month terms. Growth was led by small sales category, media, which accelerated in October, along with personal and recreational goods. Larger sales categories, homewares and appliances, grocery and liquor, and department stores recorded more moderate growth. In year-on-year terms, media, and takeaway food continue to grow, defying the overall trend.
• After contracting in September, the two largest sales states, NSW and VIC, rebounded to lead growth in October, contributing heavily to the overall result. In year-on-year terms, however, the much larger contraction in NSW, VIC, along with TAS and ACT, outweighed growth in WA, SA, and NT. Again, some perspective is warranted here, with the comparison made to a period in 2021 of exceptionally high growth.
• Regional and metro areas in all states, except SA and TAS, recorded growth in October, although regional NSW and QLD growth was fairly moderate. Growth for metro areas was primarily driven by VIC, NSW and to a lesser extent WA. In year-on-year terms, the large contraction in VIC was heavily influenced by the metro result, while in NSW it was regional areas that fared slightly worse.
• Growth recorded for both domestic and international retailers in the month, with the latter slightly stronger. Domestic retailers contributed strongly to the headline result for media. In contrast, growth was stronger for international personal and recreational goods retailers. Over the year, domestic retailers recorded a contraction more than double the rate of international, but again, this is partly reflecting the considerable base effects of growth a year prior for domestic retailers.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, growth in the NAB Online Retail Sales Index is back in positive territory, with an acceleration in October, on the back of slight growth in September. The latest result has also helped improve the year-on-year metric, albeit the measure continues to contract. As mentioned previously, this is mostly due to the base effects from the lockdown in 2021, which boosted online sales.

This base effect is clearly evident in the results for VIC, NSW, and ACT. In year-on year terms however, these results, like the headline, are an improvement on the September observations. This may indicate that the base effects are beginning to ease. NSW, the ACT, and Victoria ended lockdowns during October 2021, and a return to in-store sales ensued. Conditional on whether the recent results form a trend, we could see year-on-year growth back to neutral by the end of the year. Having said that, cost of living pressures, driven by strong inflation and the impact of higher interest rates, are likely to temper any resurgence.

By category this month, media, and personal and recreational goods, were clear performers. With growth in ten of the past twelve months, media has contributed over a third of all online sales growth over the same period, well above its weight in the index. By contrast, with generally sluggish sales over the past twelve months, personal and rec goods’ share of the index has slipped somewhat. Both categories have however seen the average spend per transaction increase over the past year, more so for media. This may be partly attributed to inflation, where spend has increased at a rate beyond that of the volume of transactions. One of the largest increases in average spend observed over the past twelve months was for homewares and appliances, which accords well with external price measures.

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