Recession running out of steam?
AP Economics Writer
WASHINGTON – The number of newly laid-off Americans filing jobless claims fell more than expected last week and retail sales grew in May for the first time in three months.
But a rise in the number of people continuing to receive jobless aid signaled that an economic recovery is still far off.
The Labor Department said Thursday that initial claims for unemployment benefits fell last week by 24,000 to a seasonally adjusted 601,000. That’s below analysts’ estimates of 615,000.
Still, the number of people claiming benefits for more than a week rose 59,000 to more than 6.8 million, the highest on records dating to 1967. The department also revised last week’s data on continuing claims, replacing what had been a drop of 15,000 with an increase of 6,000.
That means continuing claims have set records for 19 straight weeks. The data lag initial claims by a week.
Retail sales rose for the first time in three months in May, as a rebound in demand at auto dealerships and gas stations helped offset weakness at department stores.
The Commerce Department said retail sales increased 0.5 percent last month, in line with economists’ expectations. It was the largest increase since sales rose 1.7 percent in January following six straight declines.
Excluding autos, retail sales also grew 0.5 percent in May, better than the 0.2 percent gain that economists had expected.
Wall Street welcomed the drop in new jobless claims and growth in retail sales. The Dow Jones industrial average added about 75 points in morning trading, and broader indices also rose.
Consumers may be spending a bit more and layoffs may be slowing, but companies are reluctant to hire amid the longest recession since World War II. That makes it harder for the unemployed to find work.
Jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy’s health.
The four-week average of claims, which smooths out fluctuations, fell to 621,750, down from a high of about 658,000 in early April. Many economists see the decline as a sign that layoffs have peaked and the recession is bottoming out.
Still, the levels are far above what is customary in a healthy economy. Initial claims stood at 388,000 a year ago.
The department said last week that companies eliminated a net total of 345,000 jobs in May. While steep, that’s about half the monthly average of jobs lost in the first quarter.
Yet the unemployment rate jumped to 9.4 percent in May, a 25-year high, as hundreds of thousands of people entered the labor market and began looking for work but couldn’t find it, the department said.
Also Thursday, the Commerce Department said businesses cut inventories 1.1 percent in April as they struggle to get stockpiles more in line with falling sales.
Inventories have fallen for eight straight months, the longest stretch since there were 15 consecutive declines in 2001-2002, a period that covered the last recession.
AP Economics Writer Martin Crutsinger contributed to this report.
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