Retail reports disappoint; jobless claims rise

NEW YORK -- The back-to-school shopping season had a disappointing start in July as consumers rattled by a weakening housing market and other financial pressures stayed away from stores and malls.

In another indicator of some economic softness, the Labor Department said Thursday that new applications for unemployment insurance increased a seasonally adjusted 7,000 to 316,000 the week ended Aug. 4. That left claims at their highest point since late June.

Economists were predicting claims would be lower, around 310,000. Still, claims are lower now than a year ago, when they stood at 319,000.

July's retail results extended the slowing sales trend retailers have experienced since February as consumers are forced to pay more for food and gas. The slumping housing market and a widening credit crunch, both of which have made the stock market turbulent, are also making consumers shy about spending.

"Overall, July sales were negatively impacted by soft mall traffic," said Ken Perkins, president of RetailMetrics, a research company in Swampscott, Mass. "The consumer is holding up, but certainly feeling the pinch of the housing market and higher gasoline price."

Wal-Mart posted a 1.9% gain in same-store sales or sales at stores open at least a year. Same-store sales are considered a key barometer of a retailer's health. The results beat the 1.5% estimate of analysts surveyed by Thomson Financial, and the discounter said it was encouraged by positive early signs in back-to-school and back-to-college categories. However, it acknowledged that apparel and home furnishings were again weak and are expected to remain so through the third quarter.