Retail data shows sales fell in December after a strong performance in November, driven by online shopping events.

Online sales dropped 1.4 per cent from November to December, according to NAB’s Online Retail Sales Index, while ABS figures showed overall retail spending declined 0.4 per cent in December.

This is the first time NAB has recorded such a large contraction for online sales from November to December.

It follows a 2.9 per cent increase in November driven by the popularity of events like Black Friday, Cyber Monday and Vogue online shopping night.

Alan Oster, chief economist at NAB said, “The NAB Online Retail Sales Index recorded -1.4 per cent month-on-month contraction in December. There has only been one other December contraction in this series – in 2016 at a much more mild -0.1 per cent.

“Large online sales events such as Black Friday, Cyber Monday, and Vogue shopping night have contributed to a strong result in November, and may have brought forward some Christmas spending to November. However, given these sales have been part of the online retail environment for some time, it is likely that the weak December read partly reflects underlying weakness in the retail sector.”

Year-over-year, online sales grew 9 per cent. NAB estimates in the 12 months to December, Australians spent $28.6 billion on online retail, which is equivalent to around 8.9 per cent of the traditional bricks and mortar retail sector (which totalled almost $320.1 billion in the year to November 2018 according to the Australian Bureau of Statistics).

Oster said low wage growth, high personal debt levels and a weakening housing market – particularly in Sydney and Melbourne – have made consumers reluctant to spend on non-essentials.

He explained, “The Australian economy is still growing, although we revised down our GDP growth forecasts somewhat last month, as wealth effects of lower house prices and slower housing construction bear more on the outlook. We now no longer expect any movement in the cash rate until the second half of 2020.”

ABS Statistics

The trend was also reflected in the ABS retail trade figures for December, which showed a 0.4 per cent fall in turnover in December. The declines in clothing and footwear and household goods were offset by rises in food retailing at 0.5 per cent and cafes, restaurants and takeaway food services at 1.1 per cent.

This follows a 0.5 per cent rise in November 2018.

Ben James, director of quarterly economy wide surveys at ABS said, “Household goods (-2.8 per cent) and Clothing and footwear (-2.4 per cent) led the falls after strong rises in November from Black Friday promotions. There were also falls in Department stores (-1.1 per cent) and Other retailing (-0.1 per cent).”

The entire NAB report can be found here.

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