Strong jobs growth should provide a firm foundation for retail spending over this year and next, independent forecaster Access Economics says.

Last week's retail sales data showed that spending at the malls kicked off the year in fine style, growing 1.2 per cent in January, and following a respectable, albeit below trend, 3.4 per cent growth over 2009.

Such growth comes at a time of a labour market rebound which has seen 200,000 jobs created in the five months to January, cutting the unemployment rate to 5.3 per cent from last year's 5.8 per cent peak.

"Jobs growth may not continue at that pace - 40,000 new jobs per month - in the coming months, but nor does it show signs of rapidly deteriorating," Access director David Rumbens said on Wednesday, releasing his latest Retail Forecasts report.

Official labour force data for February are released on Thursday.

"A greater sense of jobs security makes for a more confident consumer - one who is more likely to be spending," he said.

However, Mr Rumbens said there are plenty of factors which will stop retail sales from being spectacular, chiefly rising interest rates.

Access is forecasting 2.6 per cent retailing growth for this 2009/10 financial year, up from 1.6 per cent growth in 2008/09.

In 2010/11 it predicts retailing to increase by 2.7 per cent, before accelerating to 3.8 per cent in 2011/12 and when it sees the peak of the next housing construction upswing.

He said the Reserve Bank of Australia's four interest rates so far demonstrates its confidence in the economy's recovery.

"Those rate rises - and more to come in 2010 - will directly eat into incomes, as well as detract from house price growth and consumer confidence,' he said.

The high Australian dollar is also playing havoc with some of Australia's exporting and import-competing sectors such tourism, while there are also still significant risks around the international outlook.

"At home, the federal government will need to commerce its budget repair, which should mean some areas of government spending are slashed in the May budget,' he said.

NSW, Victoria and the ACT are likely to suffer the most from rising mortgage rates.

On the other hand, resource rich states - Western Australia, Queensland and the Northern Territory - will again benefit from renewed demand from emerging Asian countries and the prospect of large scale resource investment projects.