Encouraging unemployment and productivity data boosted Wall Street on Thursday, as the Labor Department reported that the number of people continuing to collect unemployment benefits fell for the first time since January and new claims also dipped.
Continuing jobless benefit claims for the week ending May 23 dropped by 15,000 from a revised figure of 6.7 million the week before, dipping for the first time since early January, according to a report released Thursday. It also showed initial jobless claims fell to 621,000 in the week ending May 30 from a revised figure of 625,000 the previous week.
Meanwhile, the government also said nonfarm productivity rose at a seasonally adjusted annual rate of 1.6 percent during the first quarter, despite a drop in output because of layoffs.
The positive employment and productivity reports came one day before unemployment figures for the month of May are due to be released — with most experts bracing for bad news.
Wall Street economists expect the report to show a jump in the national jobless rate to 9.2 from 8.9 percent. Their median forecast is for a further 530,000 drop in nonfarm payrolls — nearly as bad as in April, but much less than in March.
Although continuing and initial jobless claims were down modestly last month, surveys of corporate purchasing managers show greater contraction in manufacturing and nonmanufacturing work forces. The Monster Employment Index, a gauge of online job recruitment, fell in May.
Federal Reserve Chairman Ben Bernanke said Wednesday he expects the economy to bottom out and then begin to recover late in the year. But he said recovery will likely be slow and warned that unemployment may continue to rise even after the economic recovery begins.
According to Thursday's Labor Department, the highest insured unemployment rates for the week ending May 16 were in Michigan (7.6 percent), Oregon (7.1), Puerto Rico (6.7), Nevada (6.4), Pennsylvania (6.2), Wisconsin (5.9), California (5.5), Arkansas (5.4), Idaho (5.4), and North Carolina (5.4).
The largest increases in initial claims for the week ending May 23 were in Illinois, Iowa, South Carolina, Texas and Wisconsin, the report said. Conversely, North Carolina, Michigan, Ohio, Tennessee, and Connecticut saw the biggest decreases in new claims.
Despite the slight improvement in unemployment figures, retailers reported disappointing sales in May even among discount chains.
Retail Sales Lag
Costco Wholesale Corp. and Target reported their same store sales slid last month, with Costco falling 7 percent and Target seeing a drop of 6.1 percent — much bigger than the 4.3 percent industry analysts predicted.
"There's general softness across the board, as consumers continue to face rising unemployment, falling home values and rising gas prices," said Ken Perkins, president of retail consulting firm Retail Metrics LLC.
Same-store sales at Macy's, the second-largest department store chain in the country, dropped 6 percent, and sales at Abercrombie & Fitch plummeted 28 percent. Saks' sales plunged 27 percent, and Nordstrom saw its sales decline more than 13 percent. Old Navy posted a 3 percent increase.
The retail sales results do not include Wal-Mart, the world's largest retailer. Officials with Wal-Mart Stores Inc. have stopped releasing monthly sales data.
According to a tally by Thomson Reuters, 13 retailers missed estimates, five retailers beat estimates and one matched expectations. Discretionary spending on items such as toys, accessories and department store luxuries continued to decrease, while sales of essential items were on the upswing. Food sales increased at bulk discount stores — including Costco and BJ's Wholesale Club — despite falling sales of other items.
From NPR staff and wire reports