It’s still too soon to say the Australian economy has turned the corner. Some recent data suggest things are getting better, but consumer confidence remains subdued.

Australians may simply be overwhelmed by negative news, blinded by headline-making announcements of job cuts by large manufacturers. Names like Toyota Motor Corp (Japan: 7203, NYSE: TM), Alcoa Inc (NYSE: AA) and, particularly, Qantas Airways Ltd (ASX: QAN, OTC: QUBSF) attached to tales of woe will certainly command attention.

At the same time, however, the Australian Bureau of Statistics (ABS) reported this week that the economy Down Under generated its second-largest full-time employment gain on record in February 2014. The number of people employed rose 47,300, far above the 15,000 anticipated by economists.

Unemployment remains at 6 percent–a level not seen since 2003–because the participation rate increased. That the number of people seeking work increased unexpectedly is another positive sign.

News of the 80,500 full-time jobs created last month emerged the day after the report that an index of consumer sentiment compiled by the Melbourne Institute and Westpac Banking Corp (ASX: WBC, NYSE: WBK) fell a seasonally adjusted 0.7 percent in March from February, when it declined by 3 percent, to 99.5.

It’s the fourth successive month of lower readings, and 99.5 is lowest reading since May 2013. The index is down 10 percent over the last 12 months.

Any reading below 100 indicates pessimists exceed optimists.

The largest decline was in the sub-index measuring the economic outlook for the year ahead, which dropped 4 percent. The gauge of family finances over the next 12 months fell 2.3 percent, while the index for whether it was a good time to buy a major household item declined 1.0 percent.

But the sub-index gauging the economic outlook for the next five years rose 4.1 percent, reversing much of last month’s 4.6 percent decline.

The Melbourne Institute/Westpac survey of 1,200 people was conducted during the first week of March.

The job-loss stories explain the drop in consumer confidence, as two-thirds of those surveyed said the economic news they heard was negative.

Meanwhile, National Australia Bank Ltd’s (ASX: NAB, OTC: NAUBF, ADR: NABZY) business confidence reading did slip from 8.6 to 7.3 but remains well in positive territory after languishing negative territory for most of 2012 and 2013. This is a good sign for continuing job growth.

On the housing front, the number of loans for home construction rose 5.8 percent in January. This is the 12th rise in 14 months and is a plus for the building sector, where hiring has been strong. Approvals for home construction were up 6.8 percent in January and are up 34.6 percent over the past 12 months.

And RP Data reported that since June 2012 home values are up 13.2 percent, with recent growth taking capital city home values 4.8 percent above their previous peak in October 2010. So Australians’ wealth is expanding.

Australia’s trade balance for January also came in ahead of expectations. The ABS reported that Australia’s trade surplus for January was a seasonally adjusted AUD1.43 billion, well ahead of the AUD100 million surplus anticipated by Bloomberg analysts.

Exports rose 4 percent from December, while imports climbed 1 percent.

Australian gross domestic product (GDP) expanded by 2.8 percent in 2013, beating expectations of 2.5 percent. December growth was 0.8 percent, an annualized rate of 3.2 percent. The 3 percent threshold is critical, as anything above that rate is generally believed to be sufficient to reduce the rate of unemployment.

Consumers actually spending money is a more reliable indicator of confidence than a reaction survey to a run of excessively hyped up job losses.

And retail sales climbed 1.2 percent during January 2014 from December 2013, the ABS reported on March 5, the strongest monthly gain in 11 months and far exceeding 0.4 percent growth expected by economists. Annual spending growth is now at a four-year high.

December sales were revised upward to 0.7 percent from a prior report of 0.5 percent.

Anecdotal reports from players in the field suggest things were reasonable in January following a good boxing day-to-New Year period.

(Boxing Day is the holiday that generally takes place on Dec. 26, observed in the United Kingdom, Canada, Hong Kong, Australia, New Zealand, Kenya, South Africa, Guyana, Trinidad and Tobago and other Commonwealth nations via the exchange of “boxed” gifts.)

The Coalition government has ruled out steep spending cuts to the federal budget, and on March 4 the Reserve Bank of Australia (RBA) kept its cash rate unchanged at a record-low 2.5 percent. Fiscal policy and monetary policy are likely to remain accommodative for the foreseeable future.

Recent housing and retail sales data suggest that record-low interest rates are driving a domestic resurgence in the Land Down Under. The Coalition government has ruled out steep spending cuts to the federal budget, and on March 4 the Reserve Bank of Australia (RBA) kept its cash rate unchanged at a record-low 2.5 percent.

Fiscal policy and monetary policy are likely to remain accommodative for the foreseeable future.

It may also be a bit early to say the retail sector has emerged from a long period of weakness. But economic indicators suggest a durable recovery is within sight.

And that means now is a good time to establish positions in solid dividend-paying retail businesses with good track records of performance through the cycle.

Best Bets

Conservative Holding Wesfarmers Ltd’s (ASX: WES, OTC: WFAFF, ADR: WFAFY) AUD20 billion acquisition of the Coles supermarket chain in 2005 essentially turned what was a conglomerate into a retailer.

More than half of Wesfarmer’s capital is employed in the Coles business; during fiscal 2013 the unit generated more than 42 percent of overall profit.

Coles is the main game in raw dollar terms. But the Bunnings home improvement chain is an increasingly critical component of the larger business.

Between them Coles and Bunnings contributed two-thirds of overall operating profit in the 12 months to Dec. 31, 2013. What made Bunnings so important was that its profit contribution came from much, much less capital employed.

Coles generated a 10 percent return on invested capital during 2013, Bunnings 27.6 percent.

The overall return of all the operational businesses was 12.4 percent.

That Wesfarmers is now a retailer is evidenced by the fact that the total retail contribution to group operational profit was above 80 percent during 2013.

Management is already considering an initial public offering of its insurance business, a move that could generate more than AUD1 billion in proceeds. Moves to divest other businesses–including chemicals, coal and fertilizer as well as underperforming pieces of the retail puzzle–may not be far off.

Wesfarmers may find an opportunity to divest its Target stores amid the sector upheaval created by the possible merger of equals between Myer Holdings Ltd (ASX: MYR, OTC: MYGSF) and David Jones Ltd (ASX: DJS, OTC: None).

If Myer CEO Bernie Brookes sincerely wants DJs and also wants to maintain a brand differential, adding Target as the third tier makes great sense.

Wesfarmers declared an interim dividend of AUD0.85, up 10.4 percent from AUD0.77 a year ago.

The conglomerate reported revenue growth of 4 percent to AUD31.85 million and NPAT growth of 11.2 percent to AUD1.43 billion, as its Coles grocery unit posted food and liquor comparable sales growth for the second quarter of 3.8 percent.

Wesfarmers is a buy under USD40 on the ASX using the symbol WES and on the US OTC market using the symbol WFAFF.

Wesfarmers also trades on the US OTC market as an ADR under the symbol. Wesfarmers’ ADR is worth 0.5 of an ASX-listed share and is a buy under USD20.

Leisure services provider Amalgamated Holdings Ltd (ASX: AHD, OTC: None), Australia’s largest movie theater owner/operator with other resort interests, reported fiscal 2014 first-half normalized NPAT of AUD62.7 million, down 4.4 percent compared to the prior corresponding period.

Statutory NPAT was off 2.2 percent to AUD46.2 million due to “extremely poor” ski conditions at its Thredbo alpine resort. Revenue for the period was up 6.3 percent to AUD568.5 million, as box office at its core movie theater operations was strong during the second quarter.

Aggressive Holding Amalgamated declared a fiscal 2014 interim dividend of AUD0.15, in line with the prior corresponding period.

Movie theater attendance is more tightly correlated to the quality of the fare produced in Hollywood; cinema is widely regarded as a recession-resistant business because tickets are cheap relative to other forms of entertainment such as live sports, particularly for families.

So Amalgamated is in many ways a defensive play, assuming Hollywood can continue its recent strong run of pleasing tent-pole films that attract consumers in droves.

Thredbo’s woes have more to do with unfavorable weather, though its performance is more tied to how consumers are feeling about their prospects. Alpine vacations are, generally speaking, for the well off or those who feel well off. Assuming normal weather, Thredbo should be a positive contributor in an environment of rising consumer confidence.

Amalgamated Holdings is a buy under USD8.

Crown Resorts Ltd’s (ASX: CWN, OTC: CWLDF, ADR: CWLDY) interim dividend, in keeping with management’s plan to hold the line on the payout while it invests in the growth of the business, was maintained at AUD0.18 per share.

The gaming and resorts outfit posted half-year normalized NPAT of AUD315 million, 29.4 percent higher than the prior corresponding period.

Australian resorts revenue was off 6.1 percent to AUD1.4 billion, as VIP turnover slid by 25.6 percent. But Crown’s share of Melco Crown Entertainment Ltd (NSDQ: MPEL) normalized NPAT surged by 118 percent to AUD140.6 million.

A return of confidence to the Australian consumer would boost Australian resorts. Crown Resorts is a buy up to USD16.50 on the ASX using the symbol CWN and on the US OTC market using the symbol CWLDF.

Crown Resorts also trades on the US OTC market as an ADR under the symbol CWLDY. Crown Resorts’ ADR, which is worth two ordinary, ASX-listed shares, is also a buy under USD33.

New Aggressive Holding JB Hi-Fi Ltd (ASX: JBH, OTC: None) reported fiscal 2014 first-half net profit after tax (NPAT) of AUD90.3 million, up 10 percent from AUD82.1 million for the prior corresponding period. Sales for the half year were AUD1.94 billion, up by 6.6 percent from AUD1.82 billion for the six months ended Dec. 31, 2012.

Comparable sales growth was 2.8 percent. Gross margin improved by 11 basis points to 21.6 percent. Cost of doing business (CODB) was 13.9 percent, up slightly from 13.8 percent, resulting in earnings before interest and taxation (EBIT) of AUD132.9 million, up from AUD123.7 million, and an EBIT margin of 6.8 percent, which was flat year over year.

Continuing growth is rooted in JB Hi-Fi’s success at leveraging its brand and adapting to an ever-changing retail landscape.

Management noted positive comparable sales across the majority of its hardware categories as well as the successful introduction of home appliances and strong growth in its commercial division.

JB declared an interim dividend of AUD0.55 per share, up 10 percent from an interim dividend of AUD0.50 for fiscal 2013.

JB Hi-Fi has a proven track record of successfully entering new categories to continually grow and expand its business. The next frontier, following the successful rollout of a web-based presence, is the AUD4.6 billion home appliances market.

New growth areas were significant contributors to comparable sales growth during the six months ended Dec. 31, 2013, as online revenue grew at double-digit rates, its share of total revenue rising by 10 percent.

And the nascent expansion into refrigerators, washers, dryers, dishwasher, ovens and other, smaller convenience items has exceeded management expectations, with strong comparable sales numbers for stores converted to the “JB Hi-Fi Home” concept.

Strong housing numbers, an improving employment situation and rising confidence will help JB Hi-Fi continue its strong recent track record of earnings, cash flow and dividend growth. JB Hi-Fi is a buy under USD18.omeHom