U.S. retail sales rebound in May, jobless claims drop
WASHINGTON, Jun 12, 2003 (The Canadian Press via COMTEX) -- Shoppers, after
cutting back in April, opened their pocketbooks and wallets a bit wider in May,
pushing up sales at the nation's retailers by 0.1 per cent.
The tiny rise reported by the Commerce Department Thursday came after consumers
awoke from a shopping slumber that caused retail sales to drop by 0.3 per cent
in April, according to revised figures. That represented a deeper decline than
the 0.1 per cent decrease reported a month ago.
Shoppers actually exhibited more strength in May than the 0.1 per cent rise
suggests.
A sizable 4.3 per cent drop in sales at gasoline stations reflected lower prices
at the pump and restrained the overall growth in retail sales. When gasoline
station sales are removed from consideration, retail sales rose a solid 0.4 per
cent in May, the government said.
Consumers, who have been the main force keeping the economy going, spent more
freely in May, driving up sales of furniture, electronics and appliances, and
clothing. They also treated themselves more by going out to restaurants and
bars.
The 0.1 per cent rise in retail sales was slightly stronger than the flat
reading that economists were forecasting.
Low interest rates and a refinancing boom that has left people with extra cash
and solid home values are some of the factors offsetting the negative forces of
a sluggish job market, where the nation's unemployment rate climbed to a
nine-year high of 6.1 per cent in May.
In another report, the number of American workers filing new applications for
unemployment benefits last week dropped by a seasonally adjusted 17,000 to
430,000, the Labor Department said. Even with the drop, claims still remained
above the 400,000 mark, a level that economists say points to a lackluster job
market.
The more stable, four-week moving average of claims, which smooths out weekly
fluctuations, meanwhile, rose to a four-week high last week of 433,750.
The Federal Reserve has held a key, short-term interest rate at a 41-year low of
1.25 per cent since November, with the hope that such a low rate will motivate
consumers and businesses to spend and invest more, helping to bolster economic
growth.
Economists expect the Federal Reserve Board to reduce short-term rates at its
next meeting on June 24-25 by at least a quarter percentage point. That belief
is based on concerns raised by Fed policy-makers that the country could face a
destabilizing fall in prices- something economists refer to as deflation. Though
policy-makers are quick to say the chance of such an occurrence is remote, they
said the Fed nonetheless must stand vigilant against even the threat of such a
danger to the economy.
In May, sales of automobiles dipped by 0.2 per cent, despite free-financing
offers and other generous incentives. That compared with a 1.7 per cent increase
posted in April.
Excluding sales of automobiles, which tend to swing widely from month to month,
retail sales edged up by 0.1 per cent in May. When both sales of autos and
gasoline are removed from the picture, retail sales rose a brisk 0.6 per cent in
May, the government said.
Sales at furniture stores rose 1.1 per cent in May, up from a 0.5 per cent
increase the month before.
At electronics and appliance stores, sales went up 2.9 per cent, an improvement
from April's 0.8 per cent advance.
Clothing store sales increased 1 per cent, reserving some of April's 1.8 per
cent decline.
At department stores, sales went up 0.7 per cent in May, compared with a 1.2 per
cent drop the month before.
Sales at bars and restaurants increased by 1.4 per cent in May, an improvement
from April's 0.4 per cent decline. Beauty and health stores saw sales go up 0.4
per cent in May, twice April's 0.2 per cent rise.
Sales at building and garden supply stores were flat, after registering a 0.7
per cent drop in April.
JEANNINE AVERSA
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