updated 3/11/2004 9:10:26 AM ET 2004-03-11T14:10:26

America's shoppers showed more energy in February and boosted sales at the nation's retailers by 0.6 percent, a hopeful sign for healthy economic growth in the current quarter.

Major Market Indices

The increase reported by the Commerce Department on Thursday came after sales rose by a revised 0.2 percent gain in January, typically a slow month for retailers. January's modest increase turned out to be a much better showing than the 0.3 percent decline reported a month ago.

The 0.6 percent advance in sales for February, which matched economists' expectations, represented the largest increase since November. February's gain was led by a 2.7 percent jump in automobile sales, the biggest increase in nearly a year.

Sales at clothing stores, electronics and appliance stores, and department stores also posted gains. But sales went down at furniture stores, sporting goods, book and music stores, and health and beauty shops. Sales were flat at building and garden supply stores as bad winter weather hit some parts of the country.

Excluding sales at automobiles dealerships, sales at all other retailers were flat in February, following a strong 1.2 percent rise in January. Economists, however, were forecasting a 0.5 percent increase in this measure for February.

Consumer spending accounts for roughly two-thirds of all economic activity in the United States. Thus, the spending habits of consumers play an important role in shaping the economy.

They have been keeping the economy going through the 2001 recession and the recovery, as low borrowing costs, extra cash from a wave of refinancing and tax cuts helped to support spending.

Analysts believe the economy grew at a rate of more than 4.5 percent in the current quarter, up from a 4.1 percent pace in the final quarter of 2003. They believe that consumer spending probably will be helped out by tax refunds in the current quarter.

Economists, however, are concerned that consumers could turn cautious if the lackluster job market doesn't turn around. In fact, some economists said the chances of an economic slowdown in the second half of this year have gone up in the wake of last week's disappointing employment report.

The economy added just 21,000 jobs in February — all of them in government. Private payrolls were flat.

Since President Bush took office in January 2001, the country has lost 2.2 million jobs. Bush's top rival for the White House this fall — Democratic presidential contender John Kerry — has repeatedly pointed to the president's track record on jobs as evidence that Bush is mishandling the economy.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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