Online sales rebound in August

Homewares and appliances led a bounce back by online sales in August, but not because of tax cuts.

Homewares and appliances were largest online sales category and rose 12.1 per cent. Picture: AAP

Online sales in Australia rebounded strongly in August after two considerably weak sales months in June and July, with homewares, appliances the strongest retail sectors and regional areas across New South Wales, Victoria and Queensland powering online shopping for the month.

The NAB Online Retail Sales Index released on Thursday revealed it returned to strong 5.7 per cent growth in August on a month-on-month, seasonally adjusted basis. In year-on-year terms, the growth in the NAB Online Retail Sales Index also rebounded, up 8.3 per cent year on year in August.

However, NAB senior economist Brien McDonald was quick to rule out the suggestion that recent tax cuts were driving the online sales spike in August, arguing it was more a situation of the national sales barometer returning to its long-term trend growth after weak sales in the previous two months.

The figures also likely dashes hope that continued reductions in the official interest rate by the Reserve Bank, including a historic cut to 0.75 per cent this week, was feeding in to significantly higher consumer spending. Investors will now likely turn to first quarter trading updates next month from key retailers, such as Woolworths and Coles, to gauge the impact, if any, of tax cuts and lower interest rates on shopping behaviour.

Meanwhile, NAB estimates that in the 12 months to August, Australians spent $29.53 billion on online retail, a level that is around 9.1 per cent of the traditional bricks and mortar retail sector and about 10.6 per cent higher than the 12 months to August 2018.

The NAB Online Retail Sales Index data shows August sales for all eight online retail categories growing in month-on-month growth terms, albeit with department stores virtually flat. The largest sales category, homewares and appliances, up 12.1 per cent, was a key contributor to the headline result given its relative weight in the index, bouncing back after two months of sales declines.

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However, the year-on-year change for this category remains slightly negative due to weakness in June and July. Smaller spend share category, media, recorded the highest sales growth in the month, and is now slightly positive in year-on-year terms, NAB said. In year-on-year terms, the smallest sales category, takeaway food, recorded the fastest growth with sales almost double what they were in August 2018.

In month-on-month terms, all states and territories recorded sales growth. Tasmania led monthly sales growth, with a large rebound of 15.3 per cent following two months of sales contraction. Of the larger sales states, Victoria was up 9.9 per cent and leads in year-on-year sales growth.

Regional areas were stronger too. NSW, Victoria and Queensland contributed strongly to this rebound, with regional sales growth in all three major sales states outpacing their metropolitan areas. Tasmania, WA and South Australia metro areas went against the broader result to record faster online retail spend growth relative to regional areas in the month.

“Online retail sales tend to be more volatile than broader retail, experiencing far greater monthly fluctuations, but the past five months have been considerably more so,’’ said Alan Oster, NAB group chief economist.

“Looking through the month-to-month volatility, sales growth in year-on-year terms returned to close to double digits and 12-months-to August growth remains strong. The acceleration in sales growth does not appear to be borne out in the latest result for the broader cashless retail measure, which indicates that broader retail sales growth for August were more subdued when compared to online retail.”