US jobless claims eased last week and retail sales inched higher in May, the government said in reports that suggested the economy was improving from its war-related woes but at a lukewarm pace.
Retail sales grew 0.1 per cent last month after a 0.3 per cent drop in April, the Commerce Department said. But there were hints of strength in demand as consumers flocked to furniture and appliance stores, and boosted their purchases of clothing.
The overall sales figure was held down by a 4.3 per cent slide in gasoline station receipts as fuel prices tumbled. Excluding the gasoline component, retail sales gained 0.4 per cent.
"Consumers are still buying, but they're hardly shopping till they drop," said Joel Naroff of Naroff Economic Advisors in Holland, Pa.
Many analysts expect the Federal Reserve to cut interest rates to give the economy a lift and ward off a broad fall in prices known as deflation. The new figures did little to alter the view about what the central bank will do at its meeting on June 24-25. Stocks and bonds showed little reaction.
The Dow Jones industrial average rose 13 points to end at 9,197.
"The numbers don't mean anything for the Fed," said Ram Bhagavatula, chief economist at Royal Bank of Scotland Financial Markets. The Fed, he said, has "all but promised a cut in rates and they'll have to deliver no matter what."
Unemployment has been a key concern, and the new data lent some hope the jobs picture could be improving. The Labour Department said the number of Americans lining up to claim unemployment benefits fell in the latest week in an indication job losses may be slowing.
First-time claims for state unemployment benefits fell 17,000 to 430,000 in the June 7 week, the Labour Department said. Still, the data were not as upbeat as had been expected. Analysts projected claims of 424,000.
"The data we received didn't change the overall outlook, which is still for very sluggish economic activity," said Kevin Logan, economist at Dresdner Kleinwort Wasserstein in New York. "The labour markets are still pretty soft and consumer spending is growing at at a moderate pace."
One source of concern to economists was a jump in the the number of ongoing recipients of jobless benefits during the week ended May 31 - the most recent week for which that figure is available. Continued claims rose to 3.8 million, the highest level since April 1983.
Analysts said worries about the job market are one reason consumers are wary of splurging. On the other hand, many households are taking advantage of low interest rates for home refinancings that have provided them with extra cash.
Borrowing costs on 30-year fixed-rate mortgages fell to an average 5.21 per cent this week, Freddie Mac reported. That was the lowest on the mortgage giant's records, which date back to 1971.
According to the Commerce Department, retail sales excluding automobiles rose 0.1 per cent in May compared to forecasts for a 0.2 per cent increase.
The overall retail sales figure was slightly better than the unchanged reading projected by private economists.
Car sales eased 0.2 per cent last month. But amid rising home sales, sales of furniture and home furnishing jumped 1.1 percent in May.
Electronics and appliance sales soared 2.9 per cent, the biggest gain since a 5.5 per cent increase in November 2001. Clothing sales climbed one per cent.
Most major US retailers reported better-than-expected May sales at stores open at least a year, but analysts credited hefty discounts for the strong performance, and cautioned that profits may have suffered.
Cool weather left many retailers with overflowing inventories of spring clothing and outdoor goods like patio furniture, leading to more aggressive sales.
Wal-Mart Stores Inc., the world's biggest retailer, told analysts last week that inventory levels were coming down and should be back to normal by the end of the fiscal second quarter in July.
Government data released on Thursday showed that in April, US businesses piled up additional inventories for the 12th month. Inventories at retailers, manufacturers and wholesalers rose 0.1 per cent in April, the Commerce Department said.
The rise in inventories was partly due to cars sitting on dealer lots. Business sales in April fell 1.5 per cent.