Jobless rates, June sales suggest slow turnaround

7/15/2011

WASHINGTON -- The U.S. economy will struggle to regain speed this year, data Thursday suggested, as the number of Americans filing for first-time jobless benefits remained high and retail sales barely rose in June.

But a drop in energy costs, which caused wholesale prices to post their biggest fall last month in 1 1/2 years, could boost consumer spending and give the economy much needed impetus after growth faltered early in 2011.

Initial claims for state unemployment benefits fell 22,000 to 405,000 last week, the lowest since mid-April. Forecasters had seen claims falling to 415,000. Filings held above 400,000, a level seen as a stable labor market.

Retail sales rose 0.1 percent as a rebound at auto dealers offset the biggest drop in gasoline receipts in a year, after dipping 0.1 percent in May. Economists had expected sales to slip 0.1 percent. Sales excluding gasoline rose 0.3 percent.

The retail sales report suggested growth in consumer spending in the April-June period would be less than the 2.2 percent annual pace in the first quarter. Another report from the Commerce Department showed business inventories were starting to pile up because of weak demand.

Outside food and energy, core producer prices climbed 0.3 percent after the prior month's 0.2 percent gain.

Excluding autos, retail sales were flat last month, the weakest since last July, after rising 0.2 percent in May. Clothing store receipts rose 0.7 percent and sales at building materials' and garden equipment suppliers increased 1.3 percent. Receipts at sporting goods, hobby, book, and music stores fell 0.7 percent; sales of electronics and appliances dipped 0.2 percent.