Investors might be advised to be cautious about the latest retail trade figures that showed a higher than expected 0.4 per cent gain in August - publicly listed retailers still face a sluggish domestic economy and longer-term retail trends highlight that consumers still favour thrift over extravagance.
Latest Australian Bureau of Statistics figures on Tuesday showed retail spending recorded its second consecutive monthly rise but overall growth in the sector remains flat to negative.
The 0.4 per cent August rise was slightly above the market forecast of 0.3 per cent and followed a 0.1 per cent rise in July and a flat result in June. It was the strongest monthly increase in sales since February, however, retail spending is only growing at a subdued 2.3 per cent in annual terms, which is below trend.
"After a couple of good months of sales growth at the beginning of the year, retail trade has been soft in 2013," Commonwealth Bank economist Gareth Aird said.
"First, the retail sector has had to compete against households spending a greater proportion of their disposable income on overseas holidays, which have been made cheaper by a strong Aussie dollar.
"And while the dollar has come off, overseas holidays still remain the preferred option for a significant proportion of consumers.
"Second, we suspect that higher petrol prices and an elevated level of job security concerns are blunting the positive impact that lower interest rates would normally have on retail spending."
Over August retail trade was strongest in department stores, surging by 6.4 per cent, but the strong August result was simply the partial reversal of a 7.9 per cent fall in July, analysts said.
National Australia Bank chief economist Alan Oster warned the large upswing in the department store category for August did not mean it was a return to boom times for these large national retailers.
"The trend for department store sales is running at -0.9 per cent per month, and it's been running at about -1 per cent for the last three months," Mr Oster said.
This was especially poor when compared with broader retail sales, he said.
"The trend growth in retail sales is zero, department stores are doing worse than anything else."
Larger retailers had a mixed performance on the sharemarket on Tuesday. Upmarket department store David Jones rose 4¢ to $2.93, rival Myer fell 5¢ to $2.56, Harvey Norman was up 7¢ at $3.25 and JB Hi-Fi slipped 12¢ to $20.83.
Mr Oster said the average consumer was still paying down debt.
In specific categories cafes, restaurants and takeaway food services were up 0.4 per cent, clothing and footwear up 0.3 per cent and food retailing up 0.1 per cent. Household goods were down 0.6 per cent.