- Australian online sales tumbled in February, according to analysis of transactions processed by the NAB.
- The monthly decline was the sharpest since the data series began in early 2016. The annual growth pace was also the weakest on record.
- Spending fell across all categories and states during the month, as well as domestic and overseas online retailers.
- The NAB says “it appears that broader weakness in retail is flowing through to online”.
- Australia’s February retail sales report will be released on Wednesday, April 3.
Australian online retail sales plunged in February, adding to concerns about the health of household spending, the largest part of the Australia economy.
The National Australia Bank’s Online Retail Sales Index slumped by 3.4% during the month in seasonally adjusted terms, the largest monthly decline on record.
The sharp decline followed a 0.1% decline in January, and saw annual growth in online trade slow sharply to 0.5%, also the weakest result in the history of the data series.
There’s unlikely to be any scarier charts out there about the current health of household spending.
“It appears that broader weakness in retail is flowing through to online,” said Alan Oster, Chief Economist at the NAB.
“From our data we can see that while transaction volumes are growing, the average spend in each transaction appears to be falling. This may imply price deflation or it may reflect a consumer preference shift to cheaper alternatives.”
As seen in the charts below, online spending, be it by product category or location, recorded broad-based declines in February.
Here’s online spend by category.
And for online sales by state and territory.
Ugly, and slightly unsettling.
According to the NAB, analysis of its data revealed spending also fell at both local and offshore online retailers during the month.
Over the year, only New South Wales and Victoria, at 2.3% and 3.8% respectively, recorded growth in online sales, helping to offset some large declines in other parts of the country, especially Western Australia.
While not to the same degree seen in the NAB’s online retail sales index, the sharp national slowdown in online sales mirrors recent trends in non-food spending in Australia’s official retail sales reports.
In the year to January, non-food sales grew by just 1.7%, according to the ABS, the weakest pace since October 2017. This is deemed to be a better indicator of discretionary spending patterns, and suggests that Australians are cutting back on expenditure in non-essential areas given weak incomes growth, high debt levels and falling home prices in many parts of the country.
The NAB index does little to change this view, adding a little more interest to Australia’s official retail sales report for February that will be released on Wednesday.
The NAB series measures online spending by consumers using various electronic payment methods such as credit cards, BPAY, and Paypal that are processed through its platforms.
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