Business leaders say Canberra retailers can prevail through the European crisis and adapt to online shopping but will continue to struggle under federal government belt-tightening.

Retail turnover in the ACT dropped 0.2 per cent for July, according to the latest Australian Bureau of Statistics data.

Canberra Business Council chief executive Chris Faulks said retailing trend figures had been falling away since February reflecting ongoing caution.

''The European crisis is receding a bit in people's consciousness, and there's more conversation about further public sector cuts, or cuts in procurement.

''That always plays out more seriously in Canberra than anywhere else, because people are more attuned to politics and reading what's going on and so most impact will be in the ACT.''

Civic menswear retailer John Hanna said the softer trading boiled down to a lack of confidence among people in the government sector.

''On days when people come in who are not associated with the government, they are full of confidence and they do the spending.''

He said improved trading in August was due to people in the private sector, not the public sector.

Mr Hanna said confidence would be restored from October 2013, following a federal election.

ACT Chamber of Commerce chief executive Chris Peters said with more than 40 per cent of the ACT's workforce in the Commonwealth public service, nervousness about their employment future was bound to spill over into the retail sector.

''The challenge is going to be for those retailers struggling still. Will they have post-Christmas sales before Christmas, as happened for the two previous years, and that could well damage the growth over Christmas?

''Or will they keep their nerve and trade through Christmas and have after-Christmas clearances, which would give them the best financial outcome? But it does require them to take a risk.''

Mr Peters said shoppers tended to go into shops to find what they wanted, negotiated a price and then stepped aside and searched online for better prices from other ACT suppliers before returning to re-negotiate a better price.

''It's putting pressure on retailers but strengthening the hand of consumers.''

Ms Faulks said retailers on Facebook and other social media could get 12,000 people to a shopping event.

''There is an increasing number who are finding they have got to at least engage in social media or full-on e-commerce.

''That is definitely the way of the future.''

The Australian Retailers Association is predicting August and September figures will drop further from their artificially higher mid-year levels as utility bills roll in and are affected for the first time by increased levies and taxes.