National Australia Bank has heaped some pessimism on retail sales in March, predicting a sluggish 0.2 increase in the ABS’ official turnover measure after its closely watched cashless retail sales index lost some of its steam.

The NAB Cashless Retail Sales Index grew by 1.2 per cent month-on-month in March, slower than February’s 1.4 per cent and January’s 1.5 per cent growth.

Most retail subsectors were weak in March, although there was some strength in department stores.

Year-on-year the data is more positive, up 11.5 per cent in March on growth across all subsectors.

NAB chief economist Alan Oster said while spending grew at the fastest rate since late 2015 y/y, the index implied a flat outcome for March.

“Our mapping of the “official” ABS measure also implies a relatively flat outcome in March. That is mapping equations suggest monthly growth of 0.2% March, compared to our forecast last month of 0.7% m/m,” he said.

“The retail sector is still underperforming compared with other industries, although the March NAB Monthly Business Survey saw the sector record its best business conditions result in 9 months on a trend basis.”

Cafes restaurants and takeaway was the strongest performer, up 18.9 per cent y/y, while food sales grow was 9.9 per cent.

NAB card spending in the other retailing category increased by 12.8 per cent y/y in March, slightly ahead of household goods, which recorded an increase of 12.7 per cent.

In fashion, department stores grew at 11.5 per cent y/y, while clothing and footwear was weaker, up 6.6 per cent.

NAB’s Cashless Retail Sales Index measures spending on NAB cards across the Australian economy and is watched closely because historically it correlates with ABS figures.

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