By  on January 14, 2011

WASHINGTON — Two key U.S. government reports released Friday highlightedthe slow road to recovery ahead for the apparel sector.

Specialtystore sales dropped a seasonally adjusted 0.2 percent in Decembercompared with the previous month to $18.7 billion and department storessales fell 1.9 percent to $15.4 billion, the Commerce Department said.General merchandise stores, a category that includes discounters anddepartment stores, saw sales decline 0.7 percent to $51.4 billion.

Inyearly comparisons, sales at specialty stores rose 7.4 percent, butdepartment store sales were off 1.3 percent. Sales at generalmerchandise stores were up 2.8 percent compared with a year earlier.

Inthe overall economy, sales eked out a 0.6 percent increase in Decembercompared with November to $380.9 billion, slightly below expectations,and were up 7.9 percent from a year earlier.

“While challengescertainly still remain, consumer spending is steadily returning toprerecession levels,” said Sandy Kennedy, president of the RetailIndustry Leaders Association. “The economic uncertainty and consumeranguish that defined the past three years appears to be fading asincreasing signs of growth and stability in the economy emerge.”

Salesof all goods and services during November and December had “thestrongest showing in recent memory,” said Chris Christopher, seniorprincipal economist with IHS Global Insight, rising 5.7 percent over thesame period a year earlier.

Retail apparel prices edged up aseasonally adjusted 0.1 percent in December compared with November, butfell 1.1 percent from a year earlier, Commerce reported in its ConsumerPrice Index. Women’s apparel prices declined 0.2 percent month-to-monthand 2.1 percent year-to-year. Men’s apparel prices dropped 0.4 percentcompared with a month earlier and fell 0.7 percent from December 2009.

Pricesfor all goods and services increased 0.5 percent in December and wereup 1.5 percent from a year earlier. The so-called “core” prices, whichexclude the volatile food and energy sectors, increased 0.1 percentmonth-to-month and 0.8 percent year-to-year.

Rising coststhroughout the supply chain are putting pressure on apparel prices, butwith consumers still pinched by economic uncertainty, experts saidretailers don’t have much pricing power.

“There’s still no signof robust growth,” said Kevin Regan, senior managing director and retailindustry expert with FTI Consulting. “There are too many headwindsfacing the consumer and they’re being cautious. They’re bargain hunting.We’re still in the second or third inning [of a recovery].”

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