CANBERRA, AAP – Relatively high confidence among shoppers and the continued drop in the unemployment rate are expected to have seen solid retail spending in the first few weeks of 2021.

Economists expect Friday’s preliminary figures for retail trade in January will show a two per cent increase, coming off a 4.1 per cent drop in December.

Despite this fall, retail activity was still 2.5 per cent higher in the December quarter and 9.6 per cent up on the year.

Economists at Westpac expect the monthly profile of sales will remain very choppy in the near term as a result of further virus-related disruptions impacting on spending.

There was a three-day lockdown in Brisbane in January and a five-day lockdown in Perth – after the restrictions in the NSW northern beaches either side of Christmas – while there have been more measures taken in Melbourne this month.

However, Westpac says these appear to be having a smaller impact than last year’s hard lockdowns, and the underlying momentum to sales still looks positive.

The preliminary retail figures were introduced by the Australian Bureau of Statistics last year to provide a more frequent update on the state of the economy during the pandemic.

They come as Westpac’s own reading of consumer confidence remains close to a 10-year high.

Adding to this positive mood has been the steady decline in unemployment and the recovery of 93 per cent of the jobs that were lost during the early stages of the pandemic.

Figures on Thursday showed the jobless rate dropped to 6.4 per cent in January from 6.6 per cent in December, continuing the steady decline from the 22-year high of 7.5 per cent last July.

The ABS will also release its latest survey of the COVID-19 pandemic’s impact on households on Friday.