By  on February 15, 2007

WASHINGTON — Sales at department and specialty stores outpaced stagnant overall retail performance last month, posting increases over December, the Commerce Department said Wednesday.

Seasonally adjusted department store sales of $18.1 billion increased 1.4 percent from December and 0.3 percent from January 2006. Apparel and accessories store sales of $18.4 billion were 1 percent ahead of the preceding month and 4.6 percent above a year earlier.

Overall retail and food service sales were flat for the month after a 1.2 percent gain in December, with declines at car dealers and gas stations prompting the worst showing since October.

"Whatever slowdown we've had in the housing market has not yet hit the consumer," said Paul Nolte, director of investments at Hinsdale Associates. "The consumer continues to go on his merry way, spending as much or more than what they're getting in income."

Nolte pinned this consumer bullishness on a "pretty good" overall outlook in the job market, despite Chrysler Group's announcement on Wednesday that 13,000 jobs will be eliminated in North America and all or part of four plants will be shut.

The Department of Labor reported last week that 2.1 million new jobs were generated in the U.S. in the last 12 months and that the unemployment rate stood at 4.6 percent in January.

"Wage growth has been better over the last six months than it's been over the last two years, and so we're starting to see some benefit coming back to the consumer," Nolte said.

Global Insight U.S. economist Brian Bethune said real consumption spending would grow by about 3.3 percent in the first quarter and that the uninspiring sales report points to a stable interest rate environment.

"Recent signals on retail spending suggest 'steady as she goes' on rates at the Fed and that should be constructive in terms of supporting the business expansion in 2007," Bethune wrote in a report.

The Federal Reserve Board, which adjusts interest rates to either stimulate growth or tamp down inflation, has kept its benchmark federal funds rate at 5.25 percent since June.

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