By  on September 15, 2006

WASHINGTON — The department and specialty store sectors posted sales declines in August, even as overall retail spending rose, according to the Commerce Department's monthly report released Thursday.

Sales at apparel and accessories stores fell a seasonally adjusted 0.3 percent in August to $17.9 billion, but were up 6.6 percent from a year earlier. Department store sales slid 0.2 percent to $17.5 billion and were off 1.4 percent from August 2005.

Total retail and food service sales rose 0.2 percent in July after a much stronger gain of 1.4 percent in June.

Edward Leamer, director of the UCLA Anderson Forecast, described the August sales figures as "a little weak," but not enough to indicate a trend, though he is looking for a second-half slowdown across the economy as housing prices slide.

"Housing as a driver for pulling the economy forward at breakneck speed, that's behind us now, and there's really no locomotive anymore, so you expect to see some sluggishness in all kinds of activities, including retail sales," Leamer said.

The slowdown should be tempered by the decent employment picture, he said, noting the economy added 128,000 jobs last month, below the 200,000 that a normal, healthy economy would create, but an "OK" showing.

Other economists also were reassured by the job market.

"The underlying fundamentals supporting consumption spending are still positive overall — respectable employment growth coupled with strong gains in compensation," Brian Bethune, U.S. economist at Global Insight, wrote in a report. "Consumption is projected to expand by about 2.8 percent, on average, during the second half."

In a turnaround, the energy sector, which has caused headaches for retailers and consumers, has some good news heading into fall. A gallon of regular gasoline sold for an average of $2.58 Thursday, down from $3 a month ago and $2.94 a year ago, according to the American Automobile Association. There is no telling how long that will last, though, or how much of a boost it will give to shoppers.

"In terms of the overall consumer, sure there's a little bit of good news out of the energy sector, finally," said Ken Goldstein and economist at The Conference Board. "The underlying trend is we have consumers who have turned cautious and I don't think we've seen enough of a decrease in gas prices to make consumers less cautious." 

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