The NAB Online Retail Sales Index revealed a contraction of -1.6% in May on a month-on-month, seasonally adjusted basis, following a slightly revised growth of 1.1% in April.
The decline marks a slowdown in the year-on-year growth rate to 9.0%.
“In month-on-month, seasonally adjusted terms, online retail sales growth contracted in May, but this follows strong growth in April,” said NAB chief economist Alan Oster (pictured above).
Most retail categories saw a contraction in growth during May, with the exception of takeaway food, which rebounded after a decline in April.
Smaller sales categories, such as media, along with fashion and personal and recreational goods, led the decline.
Most states experienced a contraction in growth, except for Western Australia and Tasmania. Victoria saw the biggest drop among larger states, with only takeaway food showing rapid growth, which was not enough to offset declines in other categories.
Despite rapid growth in takeaway food in VIC, it was insufficient to offset the monthly contraction across all other categories in the state.
Metro regions performed better overall, showing smaller contractions in monthly growth and stronger year-on-year growth compared to regional areas. Western Australia was an exception, where both monthly and year-on-year growth was stronger in regional areas.
Both domestic and international retailers recorded a contraction in growth in May.
However, international retailers performed slightly better, particularly in personal and recreational goods.
NAB, which recently broadened its suspicious payment alert system to tackle invoice scams, estimated that Australians spent $57.19 billion on online retail in the 12 months to May, which accounts for approximately 13.4% of the total retail trade.
Despite the monthly contraction, the overall trend shows that online sales growth continues to outpace broader retail growth in most months over the past year.
The department stores category, despite a mild contraction in May, recorded the highest average monthly growth over the past year. Its year-on-year growth far outpaced other categories, significantly contributing to the overall growth in online sales.
“The department stores category has recorded the highest average monthly growth over the past year,” Oster said, emphasising its substantial impact on the index.
Oster highlighted the broader perspective.
“Monthly online sales growth has outpaced broader retail growth in all except three of the past 12 months to April,” he said.
“Therefore, although the combined effect of the latest monthly result, along with base effects from a strong rebound in growth in May 2023, slowed the year-on-year growth rate, it is still more rapid relative to the same metric for broader retail.”
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