Initial Jobless Claims Fall; Retail Sales Disappointing

Initial claims for unemployment benefits dropped 35,000 in the last week of June, the seventh decline in eight weeks, the government said Thursday.

The Labor Department said 388,000 Americans filed new claims during the week ending June 29, down from 423,000 during the previous week.

Cheer over the report, which was cited as evidence that the economy continues to recover, was dampened by news that retailers suffered lackluster sales again last month. Department store sales were up 2% over June of a year ago but down 1.5% from May, said Edward Johnson of Johnson Redbook Service.

Analyst Thomas Tashjian of First Manhattan Co. said weakness in California, one of the last markets to feel the effects of the recession, was a key reason sales were still in the doldrums.

The drop in weekly jobless claims was the third in a row after a 47,000-claim jump during the first week in June.

Claims had fallen four straight weeks in May, the longest stretch of declines since October, 1982, at the end of the previous recession. They peaked at more than half a million in March.

The report said the percentage of the labor force receiving unemployment benefits for the week ending June 22 fell to 3.2% from 3.3% the previous week. A total of 3.4 million people was claiming benefits.

The figures are “consistent with a continued recovery,” said economist Allen Sinai of Boston Co. “We have to conclude that hiring is picking up, that layoffs are continuing but at a reduced rate and that the economy is creating more jobs.”

But William Smith of Smith Barney, Harris Upham & Co. said the retail store sales figures showed that “if the recession has ended, the consumer’s wallet has yet to discover that.”

One exception to the sluggish retail picture was Wal-Mart, whose sales rose 34% from a year ago to $3.49 billion. Same-store sales were up a healthy 8%.

No. 2 Kmart reported a 6.8% rise to $3.28 billion in sales; its stores open a year ago had a 2.2% sales gain.

Many retailers said they cut prices in June to clear seasonal inventory. “And with July a clearance month, transitioning toward fall, there could be more pressure on margins,” Smith said.

Among other large retailers, J. C. Penney Co.’s comparable-store sales fell 7.3%; same-store sales at Sears were off 3.8%, and Dayton Hudson Corp. reported only a 2.3% sales increase at stores open a year or more.

Dallas-based Penney’s total sales were $1.32 billion, down from $1.41 billion a year earlier. Sears rang up sales of $3.16 billion, compared to $3.26 billion in June, 1990.

Minneapolis-based Dayton Hudson’s total sales climbed to $1.38 billion from $1.26 billion last year.

Margo McGlade of Paine Webber said retailers with catalogue businesses and those that sell durable goods such as home appliances and furniture experienced larger-than-average sales declines.