INSTANT VIEW: Jobless claims drop, retail sales up

NEW YORK (Reuters) - The number of U.S. workers filing new claims for jobless benefits fell more than expected last week, government data showed on Thursday, pointing to an easing of labor market weakness.

KEY POINTS: * Initial claims for state unemployment insurance benefits fell 24,000 to a seasonally adjusted 601,000 in the week ended June 6, the Labor Department said. * It was the fourth straight week the number of claims declined or was unchanged. * Analysts polled by Reuters were expecting claims to drop to 615,000 from a previously reported 621,000. * However, the number of people staying on the benefit rolls after collecting an initial week of aid rose to a record 6.82 million in the week of May 30, the latest week for which data is available.

RETAIL SALES: Sales at U.S. retailers rose for the first time in three months in May as expected, lifted by strong gasoline and building material receipts, according to a government report on Thursday that bolstered views the recession was abating.

KEY POINTS: * The Commerce Department said total retail sales rose 0.5 percent after falling by a revised 0.2 percent in April, previously reported as a 0.4 percent drop. * Excluding motor vehicles and parts, sales rose 0.5 percent in May, compared to a 0.2 decline the prior month. Vehicles and parts sales rose 0.5 percent after a 0.4 percent fall in April. * Analysts polled by Reuters had forecast retail sales rising 0.5 percent in May. Excluding motor vehicles, sales had been predicted to gain 0.2 percent. * Gasoline sales jumped 3.6 percent in May after dropping 0.8 percent the previous month. Excluding gasoline, retail sales rose 0.2 percent. Sales of building materials climbed 1.3 percent in May, the biggest advance since April last year, after falling 0.6 percent in April.

COMMENTS:

T.J. MARTA, CHIEF MARKET STRATEGIST, MARTA ON THE MARKETS, SCOTCH PLAINS, NEW JERSEY:

RETAIL SALES: "There is good news with the back revisions, but the bad news is the rise in the current number comes from gasoline prices. Electronic and general merchandise are down. This isn't a strong consumer story. Is the consumer back? No, and that's worrisome part."

"The tender green shoots could be snuffed out by the frost of higher mortgage rates and gasoline prices. The bond market would love to hear the Federal Reserve will buy as many Treasuries as possible to keep down long rates. We are walking on an edge here."

JOBLESS CLAIMS: "It shows the bifurcated nature when the economy went into free-fall in Q4 when companies started dumping jobs. Now there are not that many jobs to cut."

TOM SOWANICK, CHIEF INVESTMENT OFFICER, CLEARBROOK FINANCIAL LLC, PRINCETON, N.J:

"Retail sales better than expected--as income levels from tax cuts and tax refunds are beginning to kick in. Even excluding autos and gas, retail sales rose 0.1 percent. Six out of 10 categories were higher month-over-month and that is a huge improvement over last month when only two sectors rose on a month over month basis. But the markets are under pressure because the 30-year bond auction is coming today. So it may be weighing on sentiment and 10-year yields reached 4 percent."

STEPHEN STANLEY, CHIEF ECONOMIST, RBS GREENWICH, GREENWICH, CONNECTICUT:

RETAIL SALES: "The main numbers are pretty decent, although not too much different than expected. We had negative surprises in both March and April so it was nice to get a positive number, one that is a little healthier. I think, in terms of how the numbers come out relative to the expectations, the key thing that pushes us over the edge into the positive ledger is that there were small upward revisions to March and April. So netting those in with the main numbers the figures were actually pretty healthy."

JOBLESS CLAIMS: "The jobless data was encouraging. I think after getting a 345,000 payrolls number you need something considerably lower in claims to be supportive of that, or to be consistent with that. We are moving in the right direction."

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST PETERSBURG, FLORIDA:

"The claims number was a bit lower than anticipated; still relatively high but looks like it is moving in the right direction. That is a key factor for the recovery; seeing less job destruction, but consistent with the view we will have a very subdued recovery."

"Retail sales are more or less in line with expectations, with some boost from gasoline, but pretty soft otherwise."

PETER KENNY, MANAGING DIRECTOR AT KNIGHT EQUITY MARKETS IN JERSEY CITY, NEW JERSEY

"The retail data is positive. It's up over April, which is a pleasant surprise. However, this is a number that has fluctuated wildly. It's only given direction to the market for brief periods of time and it is not an accurate depiction of consumer sentiment. It is positive, though, which is better than negative, and that's certainly good for the markets."

"The jobless data is another mild, relatively insignificant positive. We'll take all the positive we can get. The market has been looking for fuel to move higher. It's been tough to move us out of the tight range we've been in, but I'm not sure this data will be enough to push us out of that range."

ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:

RETAIL SALES: "On the surface, it looks somewhat good. Looking at the details, they look a bit disappointing. The core reading which is used to compute GDP was unchanged during the month; we were hoping for a slight increase. Consumer spending will remain weak until the labor market begins to turn around."

JOBLESS CLAIMS: "It looks like we are turning the corner. There is pretty clear evidence that the worst of the labor downturn has passed, but we still expect more job losses."

MARKET REACTION: STOCKS: U.S. stock indexes rallied, and then gave back those gains.. BONDS: U.S. Treasury debt prices trimmed losses. DOLLAR: U.S. dollar fell against the euro, and was flat against the yen.