Harvey Norman appears to be seeing the signs of slower consumer spending, posting softer-than-expected half-year earnings and a weak start to the new year.

The leading retailer on Tuesday reported a first-half underlying net profit of $301.3m, down 12.3 per cent from a year ago, on total revenue of $2.34 billion, including $1.5b in sales to customers.

At 2.22pm AEDT, Harvey Norman shares were down 9.9 per cent to an almost eight-month low of $3.75.

"Despite the macroeconomic headwinds and cost of living pressures affecting discretionary retail, our strong balance sheet and our substantial growth in net assets throughout the pandemic has left us in a solid position to withstand these challenging circumstances," Harvey Norman said in a statement.

"We remain confident in our brands and the strong market position held by our Australian franchisees and overseas company-owned stores." 

E&P Financial retail analyst Phillip Kimber said in a note the results were slightly weaker than expected. 

He said year-on-year sales growth rates in January were weak and below third-quarter forecasts.

Harvey Norman said comparable Australian sales in January were down 10.4 per cent from a year ago. 

Cooler-than-usual temperatures on the country's east coast have meant a substantial decrease in seasonal products such as air conditioners, fans, outdoor furniture and barbecues. 

News surrounding the September cyber-attack on Harvey Norman's partner Optus had an adverse impact on technology franchisees by November, Harvey Norman said, adding it was confident demand for Optus offers would rebound.

In comments to Sky News on Tuesday, Harvey Norman chairman Gerry Harvey dismissed talk Australia might slip into recession later this year. 

"We've got full employment right now - everyone I talk to in agriculture, in hospitality, wherever it is, they can't get staff. So when you have a situation like that that, you can't have a recession,'' he said.

"To have a recession you need interest rates to be eight, 10, 11 per cent, or something like that. They're nowhere near that. And to have a recession, you've got to have unemployment at seven, eight, nine, 10 per cent. It's nowhere near that!"

In a note highlighting Harvey Norman's results, CommSec chief economist Craig James agreed that the strength of the labour market would be a focus for the next few months.

"If the job market remains tight then the economy is in for a soft landing," he wrote. 

"If people lose confidence on getting or retaining a job, then retailers will have scope to be concerned."

Harvey Norman also on Tuesday highlighted its 30-year partnership with Microsoft including its AI-powered chatbots and said the recent integration of ChatGPT into Microsoft Teams would further optimise communication and collaboration processes.

Harvey Norman declared an interim dividend of 13 cents per share, down from 20 cents in the same period in the previous financial year.