Retail turnover climbed by over 3 per cent in July as shoppers took advantage of easing coronavirus restrictions across most of the country.

Buoyed by JobKeeper and JobSeeker payments turnover lifted in every state except Victoria.

But economists warn the sector remains volatile and could be negatively affected as stimulus measures are progressively unwound.

Retail turnover lifted 3.2 per cent in July as Australians refreshed their wardrobes and treated themselves to restaurant dinners and takeaway meals, ABS data shows.

Clothing, footwear and accessories spending jumped up 7.1 per cent while dining and takeaway food services experienced a 4.9 per cent lift.

It’s the third month in a row the sector has seen increases after climbing 2.7 per cent in June and a 16.9 per cent surge in May.

That helped place retail turnover for July 2020 at 12 per cent higher than the same month in 2019 – spurred on by household goods sales, which were 29.4 per cent greater than July 2019.

Stimulus measures holding the economy together

Although July’s retail figures are welcome they should be taken with a grain of salt, APAC economist Callam Pickering said.

Speaking to The New Daily, Mr Pickering said JobSeeker and JobKeeper payments were underpinning the sector’s recent strength. But those payments are set to start tapering down over coming months, leaving retailers facing an uncertain future.

“The economy is being held together right now by fiscal support measures. Without those, the economy would barely be functioning in any meaningful way,” he said.

“We have no idea how the economy is going to deal with unwinding those fiscal support measures, we don’t know if it can stand on its own two feet yet.”

That leaves retailers in a difficult spot because like all businesses, they “thrive on certainty”, Mr Pickering said.

Without knowing what the coming months will bring, it will be difficult for retailers to commit to hiring new staff.

“Businesses are still dealing with a lot of uncertainty surrounding how the economy is going to evolve and how it will cope with unwinding support payments,” he said,

“Because of that they are perhaps less likely to hire more staff, and less willing to hire as many people for Christmas.”

This is especially the case in Victoria, where retail turnover fell 2.1 per cent following tightening of coronavirus restrictions.

Mr Pickering added this weakness will weigh on the whole country’s recovery, as Victoria accounts for close to one-quarter (22 per cent) of the national economy.

“For the Australian economy to be considered strong you need New South Wales and Victoria to be doing well,” he said.

“Those states tend to boost the other states because they’re such large parts of the economy.

“When you have Victoria dragging behind, that can just slow down the overall economy.”