Jobless claims drop again; retail sales rose in May

WASHINGTON -- The economy delivered two upbeat reports Thursday: New claims for unemployment benefits dropped more than expected in the most recent week, to 601,000 and May retail sales rose by the largest amount in four months.

The Labor Department says initial claims for unemployment insurance dropped last week by 24,000 to a seasonally adjusted 601,000, below analysts' estimates of 615,000.

But continuing claims for the unemployed receiving benefits rose 59,000 to 6.8 million, the highest on records dating to 1967.

Continuing claims have risen to record levels for 19 straight weeks.

Jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy's health.

The four-week average of claims, which smooths out weekly fluctuations, fell to 621,750 from a high of about 658,000 in early April. Many economists see the decline as a sign layoffs have peaked and the recession is bottoming.

Still, the levels are far above what is customary in a healthy economy- claims stood at 388,000 a year ago.

The department said last week that companies eliminated a net total of 345,000 jobs in May. While steep, that's about half the monthly average of jobs lost in the first quarter.

Yet the unemployment rate jumped to 9.4% in May, a 25-year high, as hundreds of thousands of people entered the labor market and began looking for work but couldn't find it, the department said.

In the retail sales report, the Commerce Department said retail sales rose 0.5% after falling a revised 0.2% in April, previously reported as a 0.4% drop.

They also said businesses cut inventories 1.1% in April as they struggle to get stockpiles more in line with falling sales.

Inventories have fallen for eight straight months, the longest stretch since there were 15 consecutive declines in 2001-2002, a period that covered the last recession.

Excluding motor vehicles and parts, sales rose 0.5% in May, compared with a 0.2% decline in April. Vehicles and parts sales rose 0.5% after a 0.4% fall in April.