The retail sector appeared to have been "a notable exception" in performance terms compared to other industries in National Australia’s Bank’s monthly business survey for August 2012.

While confidence by industry fell back for most industries in the month, retail, along with transport and utilities – where confidence improved marginally and was strongest – achieved +4 index points.

“A notable exception was retail where lower rates seem to have offset these impacts – both for confidence and conditions,” NAB reported.

Overall business conditions improved modestly in August up 4 points to +1 index point. The improvement was driven by broad-based improvements in trading conditions, profitability and to a lesser extent employment. Conditions improved across most industries with particularly strong kick ups in interest sensitive industries – retail and wholesaling.

On the profitability front, retail was up 9 points but on trend terms it was still down at -8 points. This was affected by the broadly flat retail price growth, but the report also suggested an ease in labour costs growth may have helped alleviate some pressure on margins.

NAB also highlighted there was also a sharp pick up in retail trading up 23 to -4 points is likely to have reflected a rebound from the sharp decline in conditions in July.