Consumers opened up their pocketbooks and went on a spending spree in July, fueling the strongest growth in apparel and accessories and department store sales all year. Retailers benefited from intense promotional activity, newly passed tax cuts and home refinancing gains despite dramatic job losses and a high unemployment rate, according to economists.

Sales at apparel and accessories stores rose 0.8 percent in July against June on a seasonally adjusted basis to $14.87 billion, according to the Commerce Department''s monthly retail sales report.

On a year-over-year basis, sales at apparel and accessories stores showed their strongest gain since February 2001 with a 4.8 percent increase, according to Steve Spiwak, an economist at Retail Forward. "It''s a tug of war that keeps switching back and forth," said Spiwak. "Earlier in the year people were worried about jobs but in the last month unemployment claims have fallen and that coupled with a strong housing market and record refinancing in June gave consumer more confidence to go out and open up their wallets."

Department store sales, excluding leased departments, rose a healthy 1 percent in July to $18.34 billion. Compared with July 2002, department store sales fell 2.2 percent but it was still the strongest year-over-year showing all year, according to Spiwak.

Meanwhile, sales at general merchandise stores rose 1.1 percent in July to $39.74 billion. Sales in the sector rose 4.9 percent over a year ago. Meanwhile, in the overall economy, retail sales rose by 1.4 percent, marking the biggest increase in four months. Sales in July were driven by home goods, electronics and furniture, according to Spiwak.