Australian retail sales have continued to show very slow growth in recent months, NAB’s proprietary Cashless Retail Sales Index has revealed.

The National Australia Bank (NAB) Cashless Retail Index measures all cashless retail spending by consumers using debit and credit cards (both in person and online), BPAY and Paypal.

In October, the yearly rate of growth was the weakest it has been in the three year history of the series, falling to 6.5% from the recent high of 8.7% in May (adjusted seasonally). In monthly terms, the Index increased marginally by 0.2%. 

By sector, spending on food (5.1% year on year) and household goods (2.5% yoy) slowed the most. For household goods, the slowdown has been most apparent in the hardware & garden sub-sector (-2.7% yoy), which may be related to the housing construction cycle which looks to have passed its peak. Meanwhile, spending growth remains strong for cafes, restaurants & takeaways (14.1% yoy) and has also picked up for department stores in recent months (4.0% yoy).

Yearly growth is now strongest in the ACT (7.8% yoy) and Victoria (7.6% yoy). NSW has seen the most pronounced slowing in recent months, though it is still reasonably solid at 6.8% yoy. Retail sales growth in WA is much weaker than the national average and continues to trend down (2.8% yoy).

NAB Chief Economist, Alan Oster said the slowdown in retail spending was particularly disappointing given the strength of employment growth so far this year, with almost 300,000 jobs added and the unemployment rate falling to 5.4%. He commented “While wages growth may be low by historical standards, the magnitude of the lift in employment would ordinarily be supporting consumer spending to a larger degree, suggesting other concerns such as high debt levels are also leading to household caution.”

He said the shift in household spending from goods to services may reflect higher prices for utilities. “These trends, together with intense competitive pressures, are culminating in a challenging landscape for Australian retailers.” 

The report can be found in online here.