Washington, October 08: The number of U.S. workers filing new claims for jobless insurance hit a nine-month low last week and retailers reported their first monthly sales gain in over a year on Thursday, easing fears that recovery from recession would be unsustainable.
The Labor Department said on Thursday initial claims for state unemployment benefits dropped 33,000 to a seasonally adjusted 521,000 last week, the lowest level since early January. That was below market expectations for 540,000.
Separately, sales at major domestic retailers in September showed the first monthly increase since August 2008, an indication that consumer spending was starting to recover and boosting expectations that the economy was growing again after the worst recession in 70 years.
“The labor market is improving, but rather slowly,” said Cary Leahey, economist at Decision Economics in New York. “Both the initial and continuing claims numbers suggest that October ought to be a better month for payrolls than September.”
U.S. stocks rose on the claims data and the far better-than-expected monthly sales from major domestic retailers. Sentiment also got a lift from a surprise profit from Alcoa Inc.
U.S. 30-year Treasury bond prices rallied, pushing yields toward recent five-month lows, as dealers shrugged off surprisingly strong weekly jobless claims data and focused on an upcoming 30-year debt auction, which many traders believe could attract good demand.
ECONOMY GROWING AGAIN
The claims report will help to calm worries of a deterioration in the labor market after data last week showed U.S. employers cut 263,000 jobs in September, which was more than what the market had anticipated.
Data suggest the economy started growing in the third quarter after a recession that started in December 2007, but a persistently weak labor market is casting doubts over the strength and sustainability of that recovery.
The unemployment rate rose to 9.8 percent in September, a 26-year high. Economists reckon the Federal Reserve will probably refrain from raising interest rates, currently near zero, until the jobless rate peaks.
High unemployment is undercutting household incomes, restraining consumer spending — which normally accounts for about 70 percent of U.S. economic activity.
However there are signs households may be starting to loosen their purse strings.
U.S. retailers, including Macy’s Inc and Abercrombie & Fitch, recorded better-than-expected sales in September, data showed on Thursday.
Based on 30 retailers, sales at stores open at least a year climbed 0.6 percent, versus expectations for a 1.1 percent decline, according to Thomson Reuters data. Nearly 80 percent of them beat expectations.
“I think the consumer is dipping their toe back into the discretionary waters right now, but just their toe,” said Retail Metrics President Ken Perkins.
—Agencies