By  on March 16, 2005

WASHINGTON — Retail sales in February rose at a healthy pace at apparel, general merchandise and department stores, a reflection of a stronger economy and new job growth, economists said.

Sales at apparel and accessories stores gained 1.1 percent in February on a seasonally adjusted basis to $16.4 billion, while sales at general merchandise stores gained 0.7 percent to $43.9 billion and sales at department stores increased 0.5 percent to $18.1 billion, according to the Commerce Department’s retail sales report released Tuesday.

Sales at apparel and accessories stores picked up 5 percent on a year-over-year basis, while sales at general merchandise stores increased 6.6 percent compared with February 2004 and sales at department stores rose 0.9 percent.

A boost in demand for automobiles, despite the financial struggles of the U.S.’s Big Three carmakers, spurred overall retail sales, which grew 0.5 percent in February. Commerce also sharply revised upward its retail sales estimate for January, which showed an increase of 0.3 percent as opposed to a decline of 0.3 percent, as previously reported.

“At the end of the day, the economy is doing well and that is reflected in consumer spending,” said Carl Steidtmann, chief economist at Deloitte Research. “We are seeing the effects of all of the tax reductions in the previous three years begin to wane in terms of putting cash in consumers’ pockets, and that effect is replaced by job and income growth. We’ve got an economy that is clicking on all cylinders and, very clearly, one of those cylinders is consumer spending.”

Steve Spiwak, senior economist at Retail Forward, claimed two factors drove retailers’ performance in February.

“On the one hand, consumers have money to spend,” Spiwak said. “Job gains doubled in February and the IRS reported recently that the average tax refund this year is 9 percent more than last year. That suggests that household cash flow is in pretty good shape.”

Spiwak said apparel retailers have reported “broad-based strength,” as well.

“Teen retailers as a group did well, led by American Eagle Outfitters, which has shown blow-out growth for quite some time,” he added. “The consumer, like they did last year, is responding to a lot of spring fashion offers. I wondered whether the apparel sector would continue to grow strongly and the fashion trends would remain favorable, and it looks like they are.”

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