Retail Shows Surprise Gain; Jobless Claims Jump

Sales at U.S. retailers fell by a smaller-than-expected margin in February after a surprise gain the prior month, as a rise in gasoline prices limited the impact of slumping vehicle sales, a government report showed on Thursday.

In other economic news, the number of U.S. workers filing new claims for jobless benefits rose 9,000 last week and so-called continued claims notched a fresh record as a year-long recession continued to slam the labor market, data on Thursday showed.

The Labor Department said initial claims for state unemployment insurance benefits increased to a seasonally adjusted 654,000 in the week ended March 7 from a revised 645,000 the week before.

Analysts polled by Reuters had forecast 645,000 new claims versus a previously reported count of 639,000 the week before.

That's the sixth time in the past seven weeks that the jobless claims rolls have set a new record.

The tough news for jobs contrasted with a comparatively upbeat report on retail.

• Special Report: Your Job, Your Life

The Commerce Department said total retail sales eased 0.1 percent after rising by a revised 1.8 percent in January, previously reported as a 1.0 percent increase.

Excluding motor vehicles and parts, sales increased 0.7 percent in February, compared to a 1.6 percent advance the previous month. Vehicle sales plunged 4.3 percent, after a surprise 3.1 percent rise the prior month.

Analysts polled by Reuters had forecast February retail sales falling by 0.5 percent. Excluding motor vehicles, sales had been predicted to ease by 0.2 percent.

Gasoline sales climbed 3.4 percent, the biggest rise since November 2007, after increasing by 2.8 percent in January.

Sales of building materials dipped 0.2 percent in February after slipping 1.3 percent in the prior month.

Inventories Fall

Also in the ecnoomy, business inventories fell 1.1 percent in January, a government report showed on Thursday, as companies scaled back output to address sagging demand.

The Commerce Department said December's inventories were revised to show a 1.6 percent drop, previously reported as a 1.3 percent decline. Motor vehicle and parts inventories dived 4.4 percent in January, the steepest drop since July 2005, it said.

Analysts polled by Reuters had forecast business inventories falling 1.0 percent in January.

The Commerce Department said business sales dropped 1.0 percent in January after a revised 3.4 percent decline in December, which was previously reported as a 3.2 percent fall.

That left the inventories-to-sales ratio, which measures how long it would take to empty shelves at the current pace of sales, at 1.43 months' worth, unchanged from the prior month.

Compared to January last year, business inventories were 1.5 percent lower, while sales plummeted 14 percent, the Commerce Department said.

• Slideshow: States with the Highest Unemployment Rates

—The Associated Press contributed to this story.

Copyright 2009 Reuters. Click for restrictions.