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NAB Cashless Retail Sales Index: ‘Strong May, Off A Very Weak April’

The NAB Cashless Retail Sales Index has estimated that retail sales in May will record strong positive growth on a month-on-month basis, on the back of a very weak April.

“The Australian retail sector is facing extreme volatility amid a cycle of panic-buying, shutdown and now staged reopening. All this amid the sharpest and most rapid slowdown in the economy in living memory,” said NAB Group Chief Economist Alan Oster. “Our forecast for May points to a partial rebound, following a record collapse in April as panic buying ended.”

The NAB Cashless Retail Sales Index is derived from personal transaction data from NAB platforms, which represent around 2 million transactions per day. The index provides a 2-3 week lead on the ABS retail trade data.

The index noted that food, department stores and other retail rebounded strongly in May. However, the surge in demand for home office equipment appeared to slow. Meanwhile, clothing and footwear, and cafes, restaurants and takeaways declined even further.

Source: NAB Cashless Retail Sales Index May 2020

“Cafes, restaurants and takeaways may see some upside from easing restrictions, but clothing and footwear will continue to struggle if large numbers of office workers remain working from home,” Oster said.

Looking ahead, NAB expects retail spending to pick up in the second half of 2020, with continued recovery in 2021. However, NAB analysts do not see the GDP fully recovering until mid-2022.

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