Australian online retail sales tanked in April if this indicator is on the money

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  • Australia’s April retail sales report will be released on Tuesday.
  • Markets expect an increase of 0.2% following a 0.3% gain in March. NAB isn’t as optimistic.
  • Its measure of online retail sales tanked during the month. Electronic spending on retail goods was also very weak over the same period, according to NAB’s internal data.
  • NAB expects retail sales fell 0.3% in April, well below the median economist forecast for an increase of 0.2%.

Australia’s official retail sales report for April will be released on Tuesday, providing markets with the first glimpse of household spending following a weak period in the first three months of the year.

If the chart below is any guide, the April update may not make for pleasant reading.

NAB

It shows the monthly change in the National Australia Bank’s (NAB) Online Retail Sales over the past three years.

According to the NAB’s measure of online retail sales in April, spending fell off a cliff during the month, tanking 3.8% afterseasona, adjustments following a 2.4% gain in March.

“Our NAB Online retail sales index data indicates considerable weakness in online retail sales for April 2019,” said Alan Oster, NAB chief economist, in a note accompanying the report.

“All categories experienced a contraction in sales.”

Along with weakness across all categories, the NAB said spending also dropped in every state and territory.

The NAB Online Retail Sales Index measures all electronic spending by the bank’s consumers using various electronic payment methods such as credit cards, BPAY, and Paypal

As seen in the chart above, the NAB index tends to be far more volatile than broader retail sales, experiencing significant monthly fluctuations since its creation.

While that suggests the need for caution ahead of the release of Australia’s official retail sales report for April, as Oster points out, it’s not the only alternate measure of retail spending that was very weak in April.

The NAB’s Cashless Retail Sales Index, a data series that has a reasonable track record for predicting movements in the ABS retail report, also recorded a steep fall in spending during the month.

“Both online retail and broader cashless retail series indicated very weak retail conditions,” Oster said.

Given the fairly dire results from the NAB’s internal data, the bank is forecasting an ugly 0.3% decline in the official retail sales measure on Tuesday, the most pessimistic of all economist views provided to Bloomberg.

After retail turnover increased 0.3% in March, the median economist forecast looks for a smaller gain of 0.2% in April.

This 10-second guide has more on what to look out for in the latest retail update. It will arrive at 11.30am AEST.

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