The best retail sales figures in the past five months were greeted with caution by retailers, economists and bankers yesterday who say the 18-month slump may not be over. Latest government figures show July retail sales increased 2.6 per cent over last year in terms of volume and 6.9 per cent by value. During June, year-on-year volumes were up 1.4 per cent, while for the first seven months volumes have risen 0.7 per cent. Retailers said they were encouraged by any sign the slump had bottomed-out but were wary of predicting a turnaround in sentiment. Retail Management Association chairman Rodney Miles said: 'The retail sales figures look good on the surface but they are very deceptive.' Mr Miles said improved sales of cars and consumer durables were boosted by comparisons with a low base. He said sales volumes at department stores had fallen 3 per cent. 'It is very segmented. Most of the sectors are ticking along but there is absolutely not an upward swing in sentiment,' he said. Economists were wary of claiming a turnaround but believed there were grounds for optimism in the medium term. W.I. Carr assistant economist Craig Chan said: 'The retail sector is likely to show only mild growth of 2 per cent in volumes during 1996. 'Since July, 1995, interest rates have fallen 75 basis points, consumer confidence has improved and residential property prices have recovered by about 17 per cent.' Mr Chan said there was still an historically high savings rate. 'This is partly due to the uncertainty over the 1997 transfer of sovereignty, which will continue to hinder consumer spending,' he said. Hang Seng Bank research manager Joanne Yim said she believed the fall in unemployment to less than 3 per cent and the pick-up in property prices were helping sentiment. 'July's results are an improvement,' she said. 'It confirms the trend that the consumer slump is bottoming out.' The best-performing sectors were cars, posting a year-on-year gain of 32.5 per cent in volume terms, and consumer durables, which were up 17.6 per cent. Jaguar Hong Kong general manager William Lau said: 'Any pick-up has been patchy at best.' Overall sales of passenger cars this year were likely to be about 20,000 units. This would represent 3,000 fewer than last year and about half the sales of 1992 or 1993. Bright points in sales were the strong performance of the Mercedes E class as well as sales of the new Honda and Mitsubishi Lancer. Mr Lau said: 'Hong Kong people always have money in their pockets but it is not easy to induce them to spend. 'Political uncertainty remains and the property market or stock market have not provided much excitement.'