WASHINGTON (AP) – 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.

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.

Separately, new claims for unemployment benefits dropped last week by a seasonally adjusted 6,000 to 341,000, a six-week low, the Labor Department said. Although companies are slowing the pace at which they are laying off workers, they haven’t been in a rush to hire them back.

On Wall Street, though, edgy investors sent stocks skidding as a terrorist attack in Madrid overshadowed mostly good economic news and bullish forecasts from several companies. The Dow Jones industrials lost 168.51 points to close at 10,128.38.

In the retail report, 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 held steady 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.

The National Retail Federation felt good about the latest figures. “Consumers are demonstrating … that they are more comfortable spending the money they have,” said the group’s president, Tracy Mullin.

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.

“With tax refunds likely to top $125 billion during March and April, I expect continued strong consumer spending this spring,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

Some economists, however, are concerned that consumers could turn cautious if the lackluster job market doesn’t turn around. In fact, those 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.

The economy, trade and jobs, including the migration of jobs to other countries, are major issues in the presidential campaign.

Federal Reserve Chairman Alan Greenspan, appearing on Capitol Hill, said expanding educational opportunities for all Americans – not erecting protective trade barriers – was the answer to concerns about the flight of U.S. jobs to other countries.

With the labor market sluggish, Fed policy-makers are expected to hold a key short-term interest rate at a 45-year low of 1 percent when they meet next week, economists said. Tame inflation gives the Fed leeway to keep rates at super-low levels. That might motivate consumers and businesses to spend and invest more, forces which would boost economic growth.

AP-ES-03-11-04 1658EST