Australia's retail spending increased in September, but the high dollar and a weak jobs market could take any shine off the crucial Christmas period.
Retail spending rose 0.5 per cent in September, seasonally adjusted, figures released by the Australian Bureau of Statistics on Monday showed.
The figure was better than many economists had expected, though spending was still down 0.1 per cent for the three months to September.
JP Morgan Australia chief economist Stephen Walters said the September result was decent, though not spectacular.
"A 0.5 rise isn't a great outcome by historical standards but it's decent enough," he said.
But he said retailers may be in for a tougher than expected period in the lead-up to Christmas, with other figures out on Monday showing a fall in the number of jobs advertised in October.
The ANZ Job Ads survey showed job advertisements fell to a two-year low in October.
"I think people are a little bit concerned about employment going forward so I wouldn't expect the sales coming into December to be that great," Mr Walters said.
The high value of the Australian dollar, currently worth around 103 US cents, was also a problem for retailers.
"Particularly with the currency where it is; there is a big incentive for people to be buying online and offshore, rather than through the domestic retailers."
Australian Retailers Association executive director Russell Zimmerman said, with GST not applied to online purchases up to $1000, conventional Australian retailers were at a disadvantage compared to their international counterparts.
"At the moment the unlevel playing field created by the GST threshold means retailers are hampered from competing effectively," he said.
He said retailers were hoping for another interest rate cut from the Reserve Bank of Australia (RBA) on Tuesday to loosen consumer's purse strings in the lead up to Christmas.
Twelve of the 15 economists surveyed by AAP expect the RBA board will cut its interest rate by a quarter of a percentage point to three per cent on Tuesday.
Commsec chief economist Craig James said Monday's retail data showed the largest quarterly rise in spending at hardware and outdoor supply outlets in five years (up 2.2 per cent at current prices).
Cafes and restaurants were also performing well, though take away outlets were doing it tough and Australians were spending less at bookshops and specialty outlets like antique shops.
"Consumers are still spending, but selectively," he said.
He said department stores were the worst performers, with spending down 3.6 per cent at current prices in the quarter.
"The major department stores will have to work quickly to remain relevant in an increasingly fluid spending environment where store loyalty is a premium."
Western Australia recorded the strongest rise in retail spending in September (up 1.2 per cent), while Tasmania and the Northern Territory were the weakest (both up 0.2 per cent)