Retail sales, an important indicator of demand in the domestic economy, were 9.3pc higher in August than the same period last year.
Figures released by the Central Statistics Office (CSO) yesterday show the volume of retail sales dropped 4pc in August 2015 compared with July.
Sales were 9.3pc higher on an annual basis, when the impact of higher car sales is stripped out the increase was 7.6pc. The sector employs around 250,000 people.
Investec chief economist Philip O'Sullivan said: "The latest retail sales data from the CSO reveal continued strong growth in underlying consumer spending. At a headline level, sales volumes were [down] 4pc, but this is largely due to the distortions caused by the rapid recovery in car sales.
"Excluding motor sales, retail sales were up by 0.9pc on a month-on-month basis while there was a 7.6pc increase annually," he said.
"After a long run of bruisingly tough years associated with the housing crash, furniture and lighting saw the biggest increase of any segment with growth of 17.8pc.
"The breadth of the recovery in consumer spending is reflected in the fact that all 13 segments of the retail sector recorded annual growth in the volume of sales in August, while 11 posted annual growth in value terms," Philip O'Sullivan said. Business owners' group ISME said that while sales are recovering margins for retailers remain tight.
According to ISME's Mark Fielding, "The economy is showing signs of improvement but as can be seen from the last two year's retail figures, while volume is increasing, the margins in retail are disappointing, putting pressure on SME retailers in particular.
"Progress is also being hampered by the impending increase in the minimum wage, which is slowing down recruitment in the sector."
The retail sector was among the hardest hit during the economic crash. In volume terms, retail sales peaked in early 2008 but fell by more than a quarter to hit a low two years later in January 2010.
Sales have yet to recover to the 2008 high, but a 24.3pc rise over the past five and a half years means the retail trade is now once again approaching boom levels, boosted by jobs growth - up in each of the past 11 quarters - and better disposable incomes, according to Philip O'Sullivan.
However, ISME says that with margins still under pressure it wants the Government to reintroduce a reduced PRSI rate for employers to offset any increase in the National Minimum Wage (NMW) and boost employment in the sector. It also called for action on commercial rates, rents and uncompetitive labour costs.