* Retail sales up 0.5 percent, ex-gasoline up 0.2 percent
* Wholesale prices increase 0.8 percent
* Initial jobless claims fall to a still-high 434,000
* Data points to moderate second-quarter growth
(Adds details, fresh economist quotes)
By Lucia Mutikani
WASHINGTON, May 12 The U.S. economy struggled
to gain momentum early in the second quarter, with retail sales
posting their smallest rise in nine months in April and
wholesale prices increasing more than expected.
Other data on Thursday showed new claims for unemployment
benefits fell 44,000 last week to 434,000 as one-time factors
that had led to a spike in the prior week reversed. But the
level of claims still suggested hiring was softening.
"There are still headwinds for the economy stemming from
the high gasoline and food prices for the consumer as well as
input prices for producers," said Omair Sharif, an economist at
RBS in Stamford, Connecticut. "Given the high input costs, it
looks like firms are scaling back on their hiring plans."
Retail sales increased 0.5 percent after an upwardly
revised 0.9 percent gain in March as receipts at gasoline
stations and grocery stores rose strongly, the Commerce
Department said. Economists had expected a 0.6 percent rise.
Excluding gasoline, retail sales rose a tepid 0.2 percent.
The slim rise suggested the economy could struggle to meet
economists' expectations for growth of at least a 3 percent
annual rate in the second quarter. The economy expanded at a
subdued 1.8 percent pace in the January-March period, according
to the government's initial estimate last month.
While the tenth straight monthly rise in sales did
highlight consumer resilience to lofty food and gasoline
prices, households started to trim spending on big-ticket items
such as furniture and electronics and appliances.
The Commerce Department's chief economist, Mark Doms, said
consumers spent about $8 billion more at gasoline stations in
April than they had a year ago. Gasoline prices rose 24 cents,
or 6.6 percent, to $3.85 a gallon in April from March.
INSTANT VIEW: [ID:nN12292551]
Graphic - U.S. retail sales, consumer sentiment:
Graphic - U.S. jobless claims: r.reuters.com/daf59r
Graphic - U.S. producer prices: r.reuters.com/maf59r
For Reuters poll on U.S. outlook see USKEY1, [ECILT/US]
ENERGY, FOOD RAISE WHOLESALE PRICES
High energy and food costs lifted the prices farms,
factories and refineries received in April.
The Labor Department said its producer price index rose 0.8
percent after a 0.7 percent increase in March, a touch above
economists' expectations for a 0.6 percent gain.
Excluding food and energy, producer prices rose 0.3 percent
for a second straight month, suggesting building inflation and
The retail data implied consumer spending, which accounts
for 70 percent of U.S. economic activity, got off to slow start
in the second quarter with household budgets stretched by high
food and energy prices.
A Reuters survey published on Thursday showed economists
trimmed their 2011 annual average estimate for U.S. economic
growth to 2.7 percent from 2.9 percent in April.
Another survey showed U.S. shoppers are making fewer
shopping trips, eating out less, and skimping even on groceries
to rein in household budgets amid rising gasoline prices.
About a third of Americans surveyed by America's Research
Group said they were making fewer trips to stores due to higher
gas prices, with about 53 percent of participants also cutting
back on small luxuries like sit-down dining. [ID:nN12297004]
Stocks on Wall Street .SPX rose as commodity prices
rebounded, while longer-dated Treasury debt prices fell. The
dollar was down against a basket of currencies .DXY.
High price increases helped Kraft Foods Inc KFT.N post
better-than-expected first-quarter results, while rising input
costs hurt earnings at Gap Inc (GPS.N).
But relief for consumers might be around the corner. U.S.
gasoline futures RBc1 registered their sharpest daily drop
since September 2008 on Wednesday and slipped further on
Thursday, pointing to a fall in prices at the pump.
President Barack Obama urged businesses to "step up" and
hire workers, noting that high gasoline prices were one of the
"headwinds" dragging on the economy. [ID:nN11158448]
A sharp slowing in consumer spending growth put the brakes
on the economy in the first quarter, but upward revisions to
March sales figures suggested the economy may have moved ahead
faster than the 1.8 percent pace estimated by the government.
The potential for an upward revision in first quarter GDP
was supported by another report on Thursday showing strong
increases in business sales and inventories in March. Sales
rose 2.2 percent, while inventories were up 1 percent.
Details of the retail sales report were generally weak.
Receipts at auto dealerships, clothing and building
materials and garden equipment stores rose only modestly, while
sales at sporting goods, hobby, book and music stores posted
their largest decline since November 2009.
The soft data was at odds with a government report on
Friday that showed a 57,100 jump in retail payrolls in April,
the most since 2000.
Receipts at gasoline stations, which accounted for about
10.5 percent of overall retail sales in April, rose 2.7
percent. Sales at grocery stores increase 1.5 percent.
(Additional reporting by Doug Palmer; Editing by Neil