WASHINGTON — Enticed by unseasonably warm weather, gift cards and markdowns, consumers boosted retail sales across the board in January and propelled apparel and accessories stores to their biggest gains since October 2002.
The Commerce Department reported on Tuesday that apparel and accessories sales increased 4.2 percent to $17.9 billion on a seasonally adjusted basis — 10 percent ahead of the same period last year.
Department stores, which have consolidated dramatically over the past several years, posted sales growth of 1.6 percent to $18.1 billion, inching up 0.7 percent against a year ago.
“The spectacular growth we saw in January was an unexpected surprise for the industry,” Rosalind Wells, chief economist at the National Retail Federation, said in a statement. “While our 2006 outlook for the retail industry remains cautious, consumers responded to the popularity of gift cards, mild winter weather and aggressive clearance sales.”
Overall sales at all retail and food service outlets went up 2.3 percent, the biggest increase since May 2004, and 8.8 percent ahead of January 2005.
“It was an exceptional month for a variety of reasons — some related to weather, others to a delay in holiday purchases [with gift cards] and very good economic conditions overall, in terms of job and income growth,” said Brian Bethune, U.S. economist at Global Insight, a forecasting firm in Lexington, Mass.
Bethune said the firm anticipated a strong retail sales number, but it “exceeded that number by a pretty wide margin.”
He noted the “surprising strength in sales” was in the nonauto category.
“What was surprising was the rate of growth in wages and salaries, which was pretty strong in January, and we saw that in terms of income tax receipts the government reported,” Bethune said. “It also looks like year-end bonuses and incentives were generous, which was probably one of the biggest kinds of unknowns, which came into play to pump up sales more than what was expected.”
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said he expected the Federal Reserve to raise interest rates based on the robust retail sales growth.
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“The Federal Reserve has been trying to cool down the economy with interest rate hikes and this [sales increase] all but guarantees an increase in interest rates in March and again in June,” Dhawan said.
The growth in January might give the new Fed chairman, Ben Bernanke, justification to boost rates again. He is to give the Fed’s semiannual report to Congress today. The Fed’s most recent interest rate increase came on Jan. 30, when it raised the prime rate a quarter point to 4.5 percent.
The record snowfall in the Northeast last weekend forced many stores and shopping centers to shut for a day and might affect February sales.