By  on September 17, 2007

WASHINGTON — August sales at apparel and accessories stores fell a seasonally adjusted 0.1 percent compared with July, and department stores reported a 0.2 percent drop.

The results, covering all stores and released by the Commerce Department Friday, offered a more downbeat take on the fashion consumer than same-store sales for August, in which major retailers reported better-than-expected gains.

However, the Commerce Department survey looked more favorable versus a year ago, with specialty stores up 6.4 percent to $19.1 billion in sales as department stores advanced 0.3 percent to $17.6 billion.

Sales at all retail and food service establishments rose a seasonally adjusted 0.3 percent in August, but many economists expect a slowdown heading into the end of the year. And, excluding automobiles, purchases fell 0.4 percent last month. Sales for the three months ended Aug. 31 rose 0.6 percent compared with the preceding three months.

Federal Reserve policy makers are set to meet Tuesday to decide whether to lower the benchmark interest rate. Pressure from Wall Street to drop the rate has been building because of stock market turmoil as a result of the subprime mortgage market crisis and the first month of job losses in four years in August. Investors are worried that consumers will curb spending.

However, Richard Yamarone, chief economist at Argus Research Corp., predicted shoppers will be back for the holiday season even if they are going through a "soft patch" now.

"You can never bet against the American consumer," he said. "[Their] confidence can get dinged, but the consumer just hasn't tossed in the towel in over a decade."

Some of the weakness might also have to do with resets on the selling floors.

"The department stores had to make room for the fall lines, so I think they heavily discounted merchandise," Yamarone said.

For now, consumers are being supported by solid wage and income growth, said Brian Bethune, U.S. economist for Global Insight, in an analysis.

Bethune said real consumer spending, which looks to have expanded by 2.9 percent in the third quarter, will slow to 2.2 percent growth for the fourth quarter.

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