The 2.3 percent rise came as the warmest January in more than a century encouraged Americans to buy more cars and redeem holiday gift cards. The gain followed a 0.4 percent increase in December, the Commerce Department said. Excluding autos, sales rose 2.2 percent, the most in six years.

Strong sales enabled Jeff Barnard, owner of three JMR Chalk Garden and two LolaBella women's apparel and footwear stores in Utah, to avoid the deep discounts of 50 percent he typically takes in January to clear out holiday merchandise.

As a result, he said, profit margins were 12 percent higher last month than in January 2005.

"It was a very good month," he said.

Retailers in Utah are certainly benefiting from the state's strong economy and employment growth, which is higher than most other states.

Nationally, the uptick in retail sales reflects the higher wages U.S. workers are enjoying as the economy adds more jobs and unemployment declines. Treasury notes fell on speculation the economy is picking up, giving new Federal Reserve Chairman Ben Bernanke more reason to raise interest rates next month.

''We're definitely going to see a very strong first quarter,'' said Brian Bethune, an economist at Global Insight Inc., a forecasting firm in Lexington, Mass. ''It looked like consumers were hibernating in December, and all they needed was an excuse to go on a spending spree. The weather provided that.''

Strength in spending and income suggest Fed policymakers will keep raising interest rates to limit inflation, a view Bernanke may share with lawmakers today when he delivers the central bank's semiannual report to Congress.

Economists at Morgan Stanley raised their forecast for first quarter economic growth to 5.9 percent after the retail sales report, up from a previous prediction of 5.5 percent. Deutsche Bank AG lifted its estimate to 5 percent from 4.4 percent.

Retail sales make up almost half of all consumer spending, which in turn accounts for about two-thirds of the economy.

Excluding autos, gasoline and building materials, the figure the government uses to calculate consumer spending in the gross domestic product report, sales rose 1.5 percent last month after rising 0.3 percent in December. The U.S. uses data from other sources to calculate the contribution from the three categories excluded.

Sales at filling stations rose 5.5 percent last month, the most since October 2004, following a 0.7 percent drop in December. The average price of regular-grade gasoline at the pump, which affects receipts, rose in January to $2.32 a gallon from $2.19 a month earlier, according to the Energy Department.

Higher energy prices failed to limit spending at general merchandise and clothing and accessory stores, where consumers cashed in gift cards. Sales at general merchandise stores including department stores rose 2.1 percent last month, the most since May 2004.