U.S. retail sales miss expectations, jobless claims rise

WASHINGTON Thu Jun 12, 2014 11:55am EDT

1 of 3. Shoppers are seen at a Target store during Black Friday sales in the Brooklyn borough of New York, November 29, 2013.

Credit: Reuters/Eric Thayer

WASHINGTON (Reuters) - U.S. retail sales rose less than expected in May and first-time applications for jobless benefits increased last week, but the data did little to alter views the economy is regaining steam.

The Commerce Department said on Thursday that retail sales gained 0.3 percent. While that was below the 0.6 percent rise expected on Wall Street, April sales were revised higher to show a 0.5 percent increase, helping to keep growth forecasts intact.

"The continued gains during the first two months of the second quarter suggests that consumers are continuing to hold their side of the bargain, building on the strong momentum at the end of the last quarter," said Millan Mulraine, deputy chief economist at TD Securities in New York.

In a separate report, the Labor Department said initial claims for state unemployment benefits climbed 4,000 to a seasonally adjusted 317,000 for the week ended June 7.

Despite the rise, claims are not too far from their pre-recession lows and job growth continues at a steady clip.

The government said last week the economy added 217,000 jobs in May, the fourth straight month of gains above 200,000, and has recouped all the 8.7 million jobs lost during the recession.

Along with signs of a strong expansion in the manufacturing and services sectors, the jobs data bolstered expectations for a big snap back in growth after a dismal first quarter in which the economy contracted at a 1.0 percent annual rate.

While a few economists trimmed their second-quarter gross domestic product estimates slightly on the retail sales data, most continue to expect a strong rebound with growth estimates ranging between a 3 percent to 4 percent pace.

The lofty forecasts were supported by another Commerce Department report showing business inventories recorded their biggest increase in six months in April.

U.S. stocks were trading lower, while U.S. Treasury debt prices rose modestly. The dollar slipped against a basket of currencies.

UPWARD REVISIONS

So-called core retail sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, were unchanged last month.

However, they were revised to show a 0.2 percent rise in April, instead of the previously reported 0.1 percent dip. Economists said retail sales were up at a 9.2 percent annualized pace over the last three months.

"This points to ongoing solid momentum in personal spending in the second quarter, which we currently peg at a rate around 3.25 percent," said Anthony Karydakis, chief economic strategist at Miller, Tabak in New York.

In May, consumers bought automobiles, building materials and garden equipment, as well as furniture. They also shopped online. However, there were modest declines in sales at sporting goods shops, electronics and appliances stores, as well as at clothing retailers and restaurants and bars.

Another report from the Labor Department showed little signs of imported inflation, with import prices edging up 0.1 percent last month. In the 12 months through May, import prices increased 0.4 percent, advancing for the first time since July.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Tim Ahmann)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (28)
johnwayland wrote:
BO must go before the country can begin to recover from the damage done in the past 5 1/2 years.

Jun 12, 2014 9:15am EDT  --  Report as abuse
BeRealistic wrote:
So here is a post of mine from last week, just to show that this is a continuing trend in dishonest presentation of the facts. It seems that there is nothing that can make the media report the real state of affairs. We have seen the number rise 3 of the past 4 weeks (7 of the last 9), with one of those weeks a huge up spike. No matter what news we get, the media’s conclusion is always the same, something along the lines of “recovery intact”, whether the very facts they report support the story or not. What has to happen in order for the MSM to say “hey, guys, we’re in a world of hurt.”

“Just like yesterday’s story “Economy on solid ground despite cooler hiring” – today we see the numbers are higher but still the same conclusion that the job market is strengthening. Last week’s numbers revised higher, the week before that the numbers spiked like crazy. This story claims “data suggests Americans rejoining workforce” yet that is in direct contrast to their very own reporting that shows the facts are not so. They make this ludicrous conclusion because “the share of people who either have a job or are looking for one is on the rise “, remember, looking for work is NOT working. “a Reuters analysis of government data found a reversal could be underway.” – COULD BE? According to the latest numbers from BLS, the LFPR is still at an all time low, so please, how can any reasonable person say the labor market is strengthening in light of all the available evidence to the contrary?”

Jun 12, 2014 9:18am EDT  --  Report as abuse
BeRealistic wrote:
“but that will probably do little to change views that the economy is regaining momentum.”…of course not, not when the cheerleaders for this failed administration refuse to accept that it is a failure and spin everything it does, no matter how destructive, as a good thing and a sign of better things to come. I can’t believe people are still buying into this “hope and change” garbage 6 years in to utter failure.

Jun 12, 2014 9:38am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

A tourist takes a plunge as she swims at Ngapali Beach, a popular tourist site, in the Thandwe township of the Rakhine state, October 6, 2013. Picture taken October 6, 2013. REUTERS/Soe Zeya Tun (MYANMAR - Tags: SOCIETY) - RTR3FOI0

Where do you want to go?

We look at when to take trips, budget considerations and the popularity of multigenerational family travel.   Video 

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.