Retail spending fell two per cent in February compared to a month earlier as support from last year’s Federal Government cash handouts diminished.

Retail spending totalled a seasonally adjusted $18.87 billion in February compared to $19.26 billion in January when low-income families and pensioners were still enjoying the benefit of over $8 billion of cash handouts made last December.

However, the Australian Retailers Association (ARA) said the negative two per cent growth reflects a traditionally tough time of the year for retailers.

ARA executive director Richard Evans said the retail sector has been retracting since coming off the peak of the retail cycle last year but retailers remained cautiously optimistic about improved growth in the September quarter as long as employment levels remained under six per cent.

“While families deal with back to school costs and hangover credit card bills from Christmas, February is always the hardest month for retailers and the negative growth reflected normal consumer behaviour at this time of year,” he said.

Turnover for department stores (-9.8 per cent), clothing and soft goods retailing (-2.7 per cent) and household goods (-3.8 per cent) this February are coming off the back of strong trade in December and January with heavy discounting during post-Christmas sales.

The drop in food retailing (-0.4 per cent) and cafes, restaurants and takeaways (-1.3 percent) also reflects the end of Christmas celebrations.

There is more good news on the way for cashed-up consumers who will be better equipped to spend in the coming months with the Federal Government’s second stimulus package planned to hit bank accounts from April. However, the mitigating factor for economic recovery is employment.

“Employers in all sectors need to hold onto staff to ensure cash continues flows through the economy. If this happens, the retail sector should see improved growth return by the September 2009 quarter.

“The rest of the economy lags three to six months behind the retail cycle – this means there may not be good news for other industries until early 2010.,” said Evans.