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

The Commerce Department’s figures mean the decline in gross domestic product this quarter will probably be less than anticipated. Still, a sustained recovery in purchases is unlikely until later in the year because of mounting unemployment, falling home and stock values and shrinking wealth, analysts said. Household wealth fell by a record $5.1 trillion in the last three months of 2008, Federal Reserve figures showed today.

“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.”

Retail purchases decreased by 0.1 percent following a 1.8 percent jump in January, the Commerce Department said today in Washington. Excluding cars, sales climbed 0.7 percent. The Labor Department said more than 600,000 Americans filed jobless-benefit claims for a sixth straight week, the worst streak since 1982.

Treasuries rose, pushing yields lower. Benchmark 10-year notes yielded 2.86 percent as of 4:17 p.m. in New York, down 3 basis points from yesterday. The Standard & Poor’s 500 Stock Index was up 4.1 percent at 750.74, capping the biggest three-day gain since November.

Unsold Goods

Morgan Stanley analysts pared their projection for the economy’s contraction this quarter to an annual pace of 5.2 percent from 5.6 percent. “We remain skeptical that this momentum” in sales “will continue,” David Greenlaw, the bank’s chief financial economist in New York, wrote in a note.

Businesses drew down stocks of unsold goods for the fifth straight month in January, the Commerce Department also reported today. Inventories at factories, retailers and wholesalers fell 1.1 percent following a 1.6 percent drop in December. Sales declined 1 percent in January after a 3.4 percent slide the previous month.

Claims for unemployment insurance rose to 654,000 in the week to March 7, from 645,000 the previous period, the Labor Department said. The number of people staying on benefit rolls rose in the previous week by 193,000 to a record 5.317 million.

Retail 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.

Excluding Autos

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.

Industry figures earlier this month showed car 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.

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.

Growth Forecast

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.

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.

Job Cuts

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 as many as 4 million, 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 Stores Inc., 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 16:28 EDT