Fresh data offers hope for economy

By Lucia Mutikani
WASHINGTON (Reuters) - U.S. retail sales rose for the first time in three months in May and the number of workers filing new claims for jobless benefits last week hit the lowest level since January, suggesting the recession was abating.
The Commerce Department said on Thursday that sales at U.S. retailers rose 0.5 percent last month, lifted by strong gasoline and building material receipts.
A separate report from the Labor Department showed the number of U.S. workers filing new claims for jobless aid fell 24,000 to 601,000 in the week ended June 6, the lowest since the week of January 24.
"It looks like we are turning the corner. There is pretty clear evidence that the worst of the labor downturn has passed, but we still expect more job losses," said Zach Pandl, an economist at Nomura Securities International in New York.
U.S. stocks were modestly higher, while the value of the dollar edged up against the Japanese yen.
The data bolstered the argument that the economy's severe recession was close to hitting a bottom, with the sales report raising optimism that consumer spending would probably be flat to only modestly lower in the second quarter.
However, analysts said the sales strength was largely a mirage that reflected higher gasoline prices.
Gasoline prices in rose in every week in May, according to government data, increasing from $2.13 a gallon at the beginning of the month to $2.57 by June 1.
Excluding sales at gasoline stations, retail sales rose just 0.2 percent, the Commerce Department said.
"The (economy's) tender green shoots could be snuffed out by the frost of higher mortgage rates and gasoline prices," said T.J. Marta, chief market strategist at Marta on the Markets in Scotch Plains, New Jersey.
Growing optimism that the deep U.S. recession, now in its 18 month, will soon be over and worries about surging U.S. government debt have pushed yields on U.S. Treasuries sharply higher in recent weeks.
The yield on the 10-year Treasury note, a benchmark for many mortgages, hit 4 percent on Wednesday for the first time since October and revisited that level briefly on Thursday in a potential challenge to the hoped-for economic recovery.
WHITHER THE U.S. CONSUMER
Consumer spending, which accounts for about 70 percent of U.S. economic activity, rose at a 1.5 percent annual rate in the January-March period after a 4.3 percent dive in the fourth quarter of last year.
Gasoline sales jumped 3.6 percent last month after dropping 0.8 percent in April, whiles sales of building materials climbed 1.3 percent, the biggest gain since April last year. Car sales rose 0.5 percent. Continued...
Source: Reuters