Retail Sales Up 1 Percent; New Jobless Claims Drop

Retail sales, helped by frantic post-holiday discounting, were up in January for the first time since the summer, and first-time jobless benefits claims dropped slightly but remained near 26-year highs, the government reported Thursday.

The Commerce Department said January retail sales rose 1 percent, posting their first advance in seven months, after slumping by a revised 3 percent in December. January's increase in retail sales was the biggest since November 2007. Compared with a year ago, sales dived 9.7 percent.

The government reports on unemployment and sales were better than some economists had expected, but they failed to point to any reversal of the more than yearlong recession that has battered the nation's economy.

Retail consultant Howard Davidowitz of Davidowitz & Associates said the slight uptick in the sales numbers was deceptive.

"This number means absolutely nothing," he said. "January is the most unimportant month for retailing of the year. It doesn't change the trend."

"When you look at the store-for-store sales for January, they were disastrous. And auto sales were disastrous," Davidowitz told NPR.

Seasonally adjusted first-time applications for unemployment benefits dropped to 623,000, from an upwardly revised figure of 631,000 the previous week, when new jobless claims were at their highest since October 1982, the Labor Department said. That was when the economy was emerging from a steep recession, although the labor force has grown by about half since then.

A year ago, initial claims were at 339,000, according to Commerce Department data.

The four-week moving average for initial jobless claims, considered a less volatile gauge than the weekly numbers, rose to 607,500, the highest level since the week ending Nov. 13, 1982.

The number of people taking benefits for more than a week rose to 4.81 million from 4.78 million, the highest total since records began in 1967.

Excluding motor vehicles and parts, sales were up 0.9 percent after a revised record 3.2 percent decline in December, the Commerce Department said. The January rise was the highest reading since May 2008.

Gasoline sales jumped 2.6 percent, their biggest gain in seven months, after sliding 15.6 percent in December. Sales of building materials fell 3.2 percent after dropping 2.3 percent in December.

U.S. business inventories in December recorded their biggest monthly drop since 2001, and business sales fell again, according to the Commerce Department. The department said inventories fell 1.3 percent, the largest drop since October 2001, after falling by a revised 1.1 percent in November.

Business sales dropped 3.2 percent in December after dropping a record 5.7 percent in November, Commerce reported. Compared with December 2007, business inventories were 0.9 percent higher, while sales fell 11.8 percent.

From NPR staff and wire services

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