AAP

An unexpected dip in retail sales is a reminder that the economy is still struggling to gain traction, but not a sign that it is hopelessly bogged.

The value of retail turnover fell by 0.2 per cent in September, the Australian Bureau of Statistics reported on Wednesday, in contrast to economists' expectations centred on a rise of 0.5 per cent.

The Bureau's estimate of turnover in seasonally adjusted chain volume or real terms for the September quarter came in close to expectations of a fall of 0.5 per cent, dropping by 0.4 per cent.

That followed with real-terms rises of 1.0 per cent in the March quarter and 1.9 per cent in the June quarter,

While not catastrophic, the latest figures do confirm the strong upward trend evident earlier in the year, was in large part the result of fiscal stimulus measures announced in October 2008 and February this year.

The level of spending in September was still 6.0 per cent higher than a year before, while the real-terms estimate for the quarter was up by 3.3 per cent from the previous September quarter.

And there was evidence earlier on Wednesday that the services sector, including retailing, is still on a recovery path.

The Australian Industry Group/Commonwealth Bank Performance of Services Index for October hit its highest level since March 2008.

The report's authors said the result showed increased activity "underpinned by ongoing demand for retail goods, and personal and recreational services".

Even so, the flat trend in the ABS series supports the warning from the Reserve Bank of Australia (RBA), in its quarterly monetary policy statement in August, that household consumption would replace business investment and home-building as the weak link in spending as the cash stimulus measures were phased out.

Other data released on Wednesday confirmed housing remains solid, with a seasonally adjusted 2.7 per cent rise in the number of residential building approvals to a 14-month high.

In value terms, approvals for housing were up by 0.5 per cent, but a 37 per cent drop in approvals in the non-residential sector meant the total value of approvals was down by 22 per cent.

That is not as bad as it looks - it followed a 69 per cent rise in non-residential approvals and a 33 per cent rise in total approvals from August.

So despite the falls in September the total value of approvals was still 16 per cent or $400 million per month higher than the average for the first half of the year, also supporting the RBA's expectations for the shifting pattern of spending.

The moral of this story is that, despite the unexpected, but possibly inconsequential, dip in the volatile monthly retail trade series, the figures released on Tuesday line up reasonably well with what the central bank has been expecting for a while and, realistically, ought not change expectations for the economy generally or interest rates in particular.