Jobs, retail sales data support recovery hopes

WASHINGTON Thu Aug 4, 2011 5:39pm EDT

Job seekers prepare for career fair to open at Rutgers University in New Brunswick, New Jersey, January 6, 2011. REUTERS/Mike Segar

Job seekers prepare for career fair to open at Rutgers University in New Brunswick, New Jersey, January 6, 2011.

Credit: Reuters/Mike Segar

WASHINGTON (Reuters) - The number of Americans claiming new unemployment benefits was steady last week and heavy discounting lifted sales at retailers in July, hopeful signs for the sputtering economy.

Initial claims for state jobless benefits edged down 1,000 to 400,000, the Labor Department said on Thursday. Economists had expected claims to rise to 405,000 and the dip last week indicated an easing in layoffs, which have weighed on employment in the past two months.

"While the economic slowdown appears to be stretching into the third quarter, what really matters is jobs," said Millan Mulraine, a macro strategist at TD Securities in New York.

"The pace of job losses has eased relative to what it was a few weeks ago and that is important because it could reflect positively on confidence going forward."

There was also more encouraging news for the economy, whose growth pace stalled in the first half of this year.

Retailers, including Limited Brands and teen apparel chains Hot Topic Inc and Wet Seal, reported healthy monthly sales increases in July as deep discounts and unusually warm weather lured shoppers to malls.

Twenty-five retailers tracked by Thomson Reuters reported a 4.4 percent gain in July sales at stores open at least a year, just above expectations of a 4.3 percent rise.

But the reports failed to ease investors' fears over the stalled recovery, which were exacerbated by Europe's inability to tame its spreading debt crisis.

U.S. stocks tumbled in their worst sell-off in two years, while Treasury debt prices soared. The dollar rallied broadly after the ECB kept interest rates on hold and the Bank of Japan intervened in the market to curb the yen's rise.

U.S. gross domestic product grew at an annual pace of 1.3 percent in the second quarter after a negligible 0.4 percent rate in the January-March period.

Data so far show the anemic growth pace persisted early in the third quarter, with manufacturing hitting a two-year low in July and the services sector expanding at its slowest pace in nearly 1-1/2 years.

ACTIVITY EXPECTED TO PICK UP

"We expect economic activity to improve in the second half of the year, which should result in better labor market conditions," said Michael Gapen, a senior economist at Barclays Capital in New York.

"Still, the full unwinding of the high gasoline prices and supply chain disruptions stemming from the Japanese earthquake, which led to much of the softness in second-quarter, will take time, but appears to be proceeding."

The slowdown is not confined to the United States.

Sovereign debt problems in Europe have clouded the economic outlook and on Thursday, European Central Bank President Jean-Claude Trichet warned of risks to growth from financial markets and energy prices.

The claims data came before Friday's release of the government's comprehensive employment report for July, which will be scrutinized for signs of how quickly the economy can regain its momentum.

Nonfarm payrolls likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June. The jobless rate is expected to hold steady at 9.2 percent.

"The economy remains in a questionable phase and employers are well aware of it," said Jim Baird, a partner at Plante Moran Financial Advisors in Kalamazoo, Michigan.

"While a strong rebound in the July numbers is unlikely, some improvement in job creation for July or upward revisions to the June numbers could alleviate some of the market's concerns (of double-dip), at least temporarily."

Jobless claims are hovering around 400,000 and need to break decisively beneath that level to signal a sustainable improvement in the labor market.

The four-week moving average of claims, considered a better measure of labor market trends, fell to its lowest level since mid-April.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman and Dan Grebler)

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Comments (12)
lezah2 wrote:
“Nonfarm payrolls likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June.”

Way to mask the downside of the real picture, Reuters. No one believes your “surveys” any longer. They are simply fabricated to support the current administration. When are you going to learn that your credibility is plummeting because of it?

Aug 04, 2011 8:54am EDT  --  Report as abuse
DetroitNative wrote:
Every jobless report for the past year has been revised higher for the earlier week. Manipulated jobless reports, padded unemployment figures, softened inflation reports, the amount of manipulation on the leading economic indicators lately has been alarming. The Obama administration is grasping at straws and have been outright lying about the current conditions. The big lie can’t stave off the horrible truth, we are in for another economic downturn, and the continual devaluation of our currency and buying power. $4 gas is here to stay, higher energy costs all around, and increased food costs are going to destroy the American consumer. The writing is on the wall, whether you choose to read it or not. This isn’t one of those glass half full or half empty scenarios… the glass is empty!

Aug 04, 2011 9:06am EDT  --  Report as abuse
bikerjoe wrote:
You pulled this same crap last week… Quote “(Reuters) – The number of Americans claiming new jobless benefits hit a three-month low last week and contracts to buy existing homes rose in June, hopeful signs for an economy that has struggled to regain momentum.

Initial claims for state unemployment benefits dropped 24,000 to 398,000, the Labor Department said on Thursday, below economists’ expectations for a fall to 415,000.”

So how is 400,000 edging down from 398,000? What are you saying?

Stocks edged up -245 points to 11650…

Aug 04, 2011 11:19am EDT  --  Report as abuse
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