The pace of hiring in retail, hospitality and tourism businesses is starting to slow as consumers rein in their spending.

The Employment Hero small and medium sized business index also recorded a 1.5 per cent decline in median hours worked across these types of businesses in the year to August.

Average employee growth in the retail, hospitality and tourism businesses, heavily reliant on confident consumers, declined by 0.02 per cent over the month.

Chief executive officer at the human resources software firm, Ben Thompson, said the index signalled a level of austerity among consumers.

“The jump in the cost of living means everyday workers and families spend less, hitting our younger workforce the hardest,” Mr Thompson said.

The index revealed a decrease in median hours worked for the younger cohorts, with under-18s experiencing a 5.1 per cent decline.

“As we enter the Christmas and holiday season, it will be telling to see if there is an uptick in seasonality hiring or if the current declines continue through this period as businesses seek to recoup losses,” Mr Thompson said.

Official data from the Australian Bureau of Statistics points to weaker retail trade and flat discretionary spending as consumers respond to tougher financial conditions.

Higher interest rates and cost of living pressures have been keeping a lid on spending, although strong population growth has been supporting collective consumption.

Other indicators have been pointing to resilience in the consumer sector, such as the monthly CommBank Household Spending Insights index, which picked up 0.5 per cent in September.

Consumer confidence has also been improving of late, but remains well below long-run averages.

– AAP