U.S. retail sales edged up 0.1 percent in June, after dipping 0.1 percent in May, as a rebound in receipts from auto dealers offset the biggest drop in gasoline sales in a year, the Commerce Dept said.
Sales excluding gasoline rebounded 0.3 percent after declining 0.2 percent in May.
U.S. producer prices in June posted their steepest decline since February 2010 as energy prices eased. The producer price index slumped 0.4 percent, following a 0.2 percent rise in May, Labor Department data showed. Gasoline prices slumped 4.7 percent, while residential electric power costs declined a record 2 percent. Outside food and energy, core producer prices climbed 0.3 percent after the prior month's 0.2 percent gain. Compared to a year earlier, producer prices were still up 7.0 percent while the core measures rose 2.4 percent, the largest increase since July 2009.
New claims for U.S. unemployment benefits fell last week but only after upward revisions to the prior week. Weekly claims dipped to 405,000 from 427,000 in the week ending July 9, having remained above 400,000 for 14 straight weeks, according to the Labor Dept.
The four weekly moving average dipped to 423,250 from 427,000. Still, that measure remains above levels seen at the start of 2011.
The number of Americans still receiving benefits after an initial week rose slightly in the week ended July 2 to 3.73 million. Including workers receiving emergency benefits, there are 7,484, 894 individuals on the jobless rolls.
TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:
The most important one has to be retail sales. While the headline beat expectations, when you scratch beneath the surface, what you see is a number that doesn't look nearly as good. The control figure was only a tenth of a percent higher. And even with the modest revisions -- you think of this tenth of a percent gain and for Q2 you're looking at a consumer spending profile of less than one percent. And the handoff to Q3 - We've scaled back our Q3 forecast from 3 percent to 2.8 percent. It's the loss of momentum that worries us.
Beneath the surface none of this really looks good and that's true for retail sales and that's true for claims.
SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES, ST. PETERSBURG, FLORIDA:
You look at the range of data, the PPI and retail sales, and there's nothing overly shocking in any of these reports.
You've got adjustments through the holidays, also adjustments due to the factory shutdowns, so you need to take latest drop (in jobless claims) with a big grain of salt. We'd like to see a number well below 350,000.
I wouldn't read too much into them at all, they may be encouraging, but the Fed isn't going to react to any one particular number. They're going to look for a trend well below 400,000.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:
A lot of this is pretty much in line with what we were seeing. A lot of this week's fall in claims could be due to seasonal factors because this time of year we assume there will be a rise due to auto shutdowns, which will be less of a factor this year because we had some shutdowns earlier in the year. It still shows consumption is soft in retail sales and core PPI is holding up rather well while headline's coming down, so it doesn't suggest that the economy is strengthening impressively.
It reinforces a lot of things. Headline is coming down because commodity prices fell, but core is still unfortunately on the firmer side of things right now. That is going to be a concern for the Fed that will continue to keep the bar for QE3 very high despite the softness in consumer spending.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
On retail sales: The June breakdown contained a contrast from recent months in that price-sensitive gasoline was a negative. Sales ex autos and gasoline rose by 0.2 pct for a third straight month. With gasoline movements dominated by price changes and autos still restrained by Japan-induced supply disruptions, the ex-auto and gasoline number looks to be the best guide to the underlying picture. Three straight gains of 0.2 pct suggests that growth continues, but at a very slow pace, with Q2 having seen a clear loss of momentum.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
On PPI: Prices producers received for finished goods fell by 0.4 pct in June, the first decline in 12 months and the largest in since July 2009 as a result of lower energy prices. The fall follows three months of decelerating price growth. Core prices on the other hand, have posted consistent growth for most of 2011, rising by 0.3 pct in three of the past six months, including June. In two of those other months (Feb & May) prices excluding food and energy rose 0.2% percent.
On jobless claims: The number of individuals initially filing claims for unemployment insurance encouragingly fell down to 405,000 in the week ending July 9 -- a decline of 22,000 from the week prior. Even with the double-digit decline, the moving average is still a hefty 423,250 (which is only 3,750 less than last week's report) due to second count of claims filed in the week ending July 2. Originally reported as falling to 418,000, it appears the first 48 hours of the Minnesota government shutdown started more claims than previously thought, and a handful of industries (education, manufacturing, and transportation) with increased layoffs in New York pushed the level up to 427,000 for that week.