The latest economic figures show retail sales in Canberra have been surprisingly strong and retailers are optimistic about Christmas trading.
Deloitte Access Economics quarterly Retail Forecast shows solid growth in the September quarter pushed ACT retail sales growth for the past year to more than 5 per cent.
The report found falling interest rates appear to have unlocked consumer caution, with the "noose loosening" around the neck of Canberra's mortgage belt.
Analyst David Rumbens says car sales are high, and cafes and restaurants are better patronised than they have been in some time.
Retailers are also optimistic about Christmas trading, with sales expected to be better than in December 2010 and 2011.
But the outlook for the new year is more modest.
Mr Rumbens says cutbacks in the public service and a weaker construction market will impact retail spending.
"It's likely to be more modest for the ACT going forward.
There are some headwinds.
So retail sales growth for the ACT is unlikely to maintain that kind of pace," he said.