U.S. retail sales rise

Jeannine Aversa

Thursday, June 12, 2003 | 9:33 a.m.

WASHINGTON -- Shoppers, after cutting back in April, opened their pocketbooks and wallets a bit wider in May, pushing up sales at the nation's retailers by 0.1 percent.

The tiny rise reported by the Commerce Department today came after consumers awoke from a shopping slumber that caused retail sales to drop by 0.3 percent in April, according to revised figures. That represented a deeper decline than the 0.1 percent decrease reported a month ago.

Shoppers actually exhibited more strength in May than the 0.1 percent rise suggests.

A sizable 4.3 percent drop in sales at gasoline stations reflected lower prices at the pump and restrained the overall growth in retail sales. When gasoline station sales are removed from consideration, retail sales rose a solid 0.4 percent in May, the government said.

Consumers, who have been the main force keeping the economy going, spent more freely in May, driving up sales of furniture, electronics and appliances, and clothing. They also treated themselves more by going out to restaurants and bars.

The 0.1 percent rise in retail sales was slightly stronger than the flat reading that economists were forecasting.

Low interest rates and a refinancing boom that has left people with extra cash and solid home values are some of the factors offsetting the negative forces of a sluggish job market, where the nation's unemployment rate climbed to a nine-year high of 6.1 percent in May.

In another report, the number of American workers filing new applications for unemployment benefits last week dropped by a seasonally adjusted 17,000 to 430,000, the Labor Department said. Even with the drop, claims still remained above the 400,000 mark, a level that economists say points to a lackluster job market.

The more stable, four-week moving average of claims, which smooths out weekly fluctuations, meanwhile, rose to a four-week high last week of 433,750.

The number of workers who continue to draw jobless benefits climbed to a 20-year high of 3.8 million for the work week ending May 31, the most recent period for which that information is available. That number suggests that not a lot of hiring is going on, economists say.

The Federal Reserve has kept a key, short-term interest rate at a 41-year low of 1.25 percent, with the hope will motivate consumers and businesses to spend and invest more, bolstering economic growth. Economists expect the Fed to reduce that rate at its next meeting on June 24-25.

In a third report, businesses' inventories of unsold goods nudged up 0.1 percent in April as sales slid by 1.5 percent, the Commerce Department said.

While consumers have been doing their part to carry the economy, businesses have not. Businesses, wanting profits to fully heal and trying to cope with the uneven recovery, have been wary of making big investments in capital spending and in hiring. That's the main factor hampering the economy's return to full economic speed.

In the retail report, sales of automobiles dipped by 0.2 percent in May, despite free-financing offers and other generous incentives. That compared with a 1.7 percent increase posted in April.

Excluding sales of automobiles, which tend to swing widely from month to month, retail sales edged up by 0.1 percent in May. When both sales of autos and gasoline are removed from the picture, retail sales rose a brisk 0.6 percent in May, the government said.

Sales at furniture stores rose 1.1 percent in May, up from a 0.5 percent increase the month before.

At electronics and appliance stores, sales went up 2.9 percent, an improvement from April's 0.8 percent advance.

Clothing store sales increased 1 percent, reserving some of April's 1.8 percent decline.

At department stores, sales went up 0.7 percent in May, compared with a 1.2 percent drop the month before.

Sales at bars and restaurants increased by 1.4 percent in May, an improvement from April's 0.4 percent decline. Beauty and health stores saw sales go up 0.4 percent in May, twice April's 0.2 percent rise.

Sales at building and garden supply stores were flat, after registering a 0.7 percent drop in April.