Retail spending figures for June were below market expectations but it appears that the big retailers are seeing an improvement in sales.
Australian retail spending in June was $21.819 billion, almost unchanged from $21.814 billion in May, the Australian Bureau of Statistics said.
The flat result was worse than the 0.4 per cent monthly rise the market was expecting.
CommSec chief economist Craig James said consumers are spending, but spending in different ways.
"They're not buying physical goods but buying services," he said.
"The big retailers posted a gain of 0.3 per cent in June, 0.4 per cent in May, so that's giving a different indication of what is happening in the retail sector."
Mr James said the retail data would not change expectations for a cash rate cut by the central bank.
"I think it (the Reserve Bank of Australia) has a better gauge of what's going on rather than just look at one set of figures like the retail trade data," he said.
National Australia Bank senior economist David de Garis said the weaker than expected retail result made the high probability of a rate cut on Tuesday even more likely.
"The market is pretty well-priced for an interest rate cut tomorrow so it's just a little bit more evidence to support that," he said.
"We did have that burst of retailing at the start of the year, the January and February results were encouraging, but since then, it's been quite weak."
Mr de Garis said retail sales didn't always provide the most reliable guide on consumer spending.
"Consumers might be spending more on healthcare or insurance or education and might be spending less in shops, but for what it's worth, the figures are certainly suggestive of a defensive consumer," he said.
"It's a sign that consumers are still quite cautious with their spending so they're using the rate cuts to pay off their loans at a faster rate and not spending more in shops."
Latest Business Articles