The number of US workers drawing unemployment benefits hit a record in February as companies struggle with a 14-month recession, data showed today, but a slight easing in retail sales last month offered cautious optimism.
The US Labor Department said the number of people remaining on the benefits roll after drawing an initial week of aid rose by 193,000 to a record 5.317 million in the week ended February 28th, the most recent week for which data is available.
At the same time, new applications for state unemployment insurance benefits increased to a seasonally adjusted 654,000 in the week ended March 7th, from 645,000 the week before.
US stocks shrugged off the labour data, focusing instead on the smaller-than-expected drop in retail sales in February, while bond prices pared gains.
Sales at US retailers eased 0.1 per cent after rising by a revised 1.8 per cent in January, the Commerce Department said.
Excluding motor vehicles and parts, sales increased 0.7 per cent in February, compared to a 1.6 per cent advance the previous month. Vehicle sales plunged 4.3 per cent, after a surprise 3.1 per cent rise the prior month.
"There's stability in these numbers, particularly when you strip out autos and gas. So clearly the consumer is not completely knocked out," said Michael Woolfolk, senior currency strategist at the Bank of New York-Mellon in New York.
Households, buffeted by rising unemployment and plummeting asset values, have become penny-pinchers and are shunning big-ticket items such as cars.
Consumer spending, which constitutes over two-thirds of US economic activity, dropped at a 4.3 per cent rate in the fourth quarter, the biggest fall since the second quarter of 1980. That contributed to the economy's 6.2 per cent annualised pace contraction in the October-December quarter.
With the economy continuing to bleed jobs, analysts reckon consumer spending will stay depressed in first quarter of this year. The unemployment rate rose to 8.1 per cent in February, its highest level in a quarter of a century.
Gasoline sales climbed 3.4 per cent in February as prices rose -- the biggest gain since November 2007 -- after increasing by 2.8 per cent in January. Sales of building materials dipped 0.2 per cent in February after slipping 1.3 per cent in the prior month.
Excluding both motor vehicle and gasoline sales, retail sales rose 0.5 per cent in February after a 1.4 per cent rise in January. On year, retail sales were down 8.6 per cent overall, and 5.0 per cent excluding motor vehicles.
Reuters