March 12 (Bloomberg) -- Sales at U.S. retailers in February fell less than forecast and January’s gain was almost double the previous estimate, indicating the biggest part of the economy may be starting to stabilize.

Purchases decreased by 0.1 percent, led by the slump in demand for cars, following a revised 1.8 percent jump in January, the Commerce Department said today in Washington. Excluding automobiles, sales unexpectedly climbed 0.7 percent.

After tumbling at the fastest pace in three decades, consumer spending may stop hemorrhaging in coming months as a drop in fuel costs and tax cuts put more money in Americans’ pockets. Still, mounting unemployment and falling home and stock values make sustained gains in purchases unlikely until late 2009, economists said.

“People are responding to discounting” as companies seek to get rid of surplus inventory, Roger Kubarych, chief U.S. economist at UniCredit Global Research in New York, said in a Bloomberg Television interview. “In order to have a sustained increase in personal consumption, wealth has to go up.”

Treasuries erased earlier gains after the report, with yields on benchmark 10-year notes at 2.92 percent at 8:56 a.m. in New York after dipping as low as 2.86 percent earlier. Futures on the Standard & Poor’s 500 Stock Index were little changed at 720.70 after losing as much as 1.3 percent earlier today.

Jobless Claims

A separate report today showed claims for unemployment insurance rose to 654,000 last week from 645,000 the previous period, the sixth straight week above 600,000.

Sales were projected to fall 0.5 percent in February after an originally reported 1 percent gain the prior month, according to the median estimate of 77 economists in a Bloomberg News survey. Forecasts ranged from a gain of 1 percent to a decline of 1.5 percent.

Excluding automobiles, last month’s gain followed a 1.6 percent jump in January that also exceeded the government’s previously estimated 0.9 percent increase. Such purchases were forecast to decrease 0.1 percent, according to the survey median.

Sales at automobile dealers and parts stores slumped 4.3 percent, the most since October.

GM’s Survival

Industry figures earlier this month showed sales in February fell to the lowest level since 1981, led by a 53 percent plunge at General Motors Corp., which is surviving with the help of government loans.

Other categories showing decreased demand included building material stores, grocery stores and restaurants and bars.

A jump in receipts at service stations as gasoline prices rebounded led gainers. Filling station sales climbed 3.4 percent. The average cost of regular gasoline rose 14 cents to $1.92 a gallon in February from January, and is holding near that level so far this month, according to AAA.

Excluding gas, retail sales decreased 0.4 percent.

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales increased 0.5 percent, after rising 1.7 percent. The government uses data from other sources to calculate the contribution from the three categories excluded.

Quarterly Estimates

Today’s report may prompt economists to boost estimates for consumer spending this quarter. A Bloomberg survey earlier this month showed the median forecast called for the world’s largest economy to shrink 2.5 percent this year, the most since 1946. Consumer spending, which accounts for 70 percent of the economy, was projected to fall at a 1.7 percent annual pace this quarter and decline 0.7 percent from April to June.

Economists also projected the jobless rate will climb to 9.4 percent by the end of the year and remain elevated through 2011, one reason for the gloomy outlook on spending.

Employers cut 651,000 jobs in February and the unemployment rate jumped to 8.1 percent, the highest level since December 1983, Labor reported last week. President Barack Obama’s stimulus plan aims to create or save 3.5 million jobs, and the economy has lost 4.4 million jobs since the recession began in December 2007.

The economic crisis is “unlike anything we’ve seen in our time,” Obama said in a March 10 speech in Washington.

In addition to service stations, clothing, furniture, electronics and department stores showed gains in sales.

Wal-Mart Lure

Wal-Mart, the world’s largest retailer, reported a 5.1 percent gain in February sales at stores open at least a year. Consumers, trying to make ends meet as job losses mount, are being drawn to its lower prices on groceries, fuel and electronics.

Retailers reporting sales declines in February included Macy’s Inc. and J.C. Penney Co., clothing chains Gap Inc. and Abercrombie & Fitch Co., and luxury sellers Nordstrom Inc. and Neiman Marcus Group Inc., company announcements showed.

The rest of the year will be “very difficult,” Dallas- based Neiman’s Chief Executive Burton Tansky said in a conference call with analysts yesterday. The retailer is canceling orders, returning goods to vendors and cutting expenses, Tansky said.

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

Last Updated: March 12, 2009 08:59 EDT