Updated July 04, 2017 13:09:12

Photo: Retail sales rose across most sectors during May, but continued to be weak in clothing. (ABC News: Stephen Letts)

Consumers appear to have put worries about low wages growth and high household debt behind them to open their wallets in May.

Retail sales rose 0.6 per cent, on a seasonally adjusted basis, down on the 1 per cent growth recorded in April, but still three times the rate that most economists expected after a poor start to the year.

Sales were up 3.2 per cent over the past year.

Sales were generally stronger across most categories, although department stores continued to have problems, with turnover falling 0.7 per cent.

While the broad category of clothing, footwear and personal accessories rebounded by from its recent weakness, it was largely propped up by demand for personal accessories and shoes. Apparel sales fell in May.

Supermarket sales rose 0.5 per cent, while liquor sales dried up, down 2.1 per cent.

The housing sensitive sectors were resilient, with strong gains in electronic goods, furnishings and garden supplies.

Capital Economics Kate Hickie said the much stronger than anticipated rise in retail sales in May, alongside the surge in sales over April, suggests that real consumption growth accelerated in the second quarter.

However, Ms Hickie doubted it marks a sustained pick-up in consumption growth.

"With consumer confidence continuing to trend downwards, households' incomes facing an additional squeeze from rising energy bills and household indebtedness at a record high we expect that real consumption growth will slow from around 2.6 per cent year-on-year in the second quarter to 2.0 per cent by the end of the year," Ms Hickie said.

As good as it gets: Citi

Citi's Josh Williamson says the headline figure was largely supported by stronger than anticipated spending for household related items.

"We suspect this reflects the pick-up in housing churn from a new months ago," Mr Williamson said.

"Solid employment gains over the three months to May could also have improved the near-term outlook for household expenditure."

However Mr Williamson says May's retail trade data is probably as good as it gets.

"Cooling in residential construction argues against ongoing strong gains in housing related expenditure growth and income sapping rises in essential items will likely constrain household budgets."

Across the states, shoppers in New South Wales and Victoria were the most active while retail sales in Queensland fell for the sixth time in the past seven months.

Source: ABS

Topics: retail, economic-trends, business-economics-and-finance, australia

First posted July 04, 2017 11:56:45