US economy's pace weakens
Source: Agencies |
May 13, 2011, Friday
|
Print Edition
Print Edition
THE United States economy struggled to gain momentum early in the second quarter, with retail sales posting their smallest rise in nine months in April and wholesale prices increasing more than expected.
Other data yesterday showed new claims for unemployment benefits fell 44,000 last week to 434,000, but they remained too high to signal a strong labor market recovery.
Retail sales added 0.5 percent after an upwardly revised 0.9 percent gain in March as receipts at gasoline stations and grocery stores rose strongly, the US Commerce Department said. Economists had eyed a 0.6 percent rise.
Excluding gasoline, retail sales rose 0.2 percent.
It was the 10th straight monthly increase in sales and showed US households exhibiting some resilience to lofty food and gasoline prices, which robbed spending from other areas.
"The rise in retail sales was basically related to higher gasoline prices. Overall the report was good because it was positive, but the economy and consumers are still having trouble," said Eugenio Aleman, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Separately, the Labor Department said producer prices rose 0.8 percent in April, after a 0.7 percent rise in March. Economists had expected a 0.6 percent rise.
Financial markets showed little reaction to the economic reports. US stocks were lower as falling commodity prices raised questions about the strength of the global economic recovery, while Treasury debt was little changed and the dollar was higher.
The retail data implied consumer spending, which accounts for 70 percent of US economic activity, got off to slow start in the second quarter as household budgets remained stretched by high food and energy prices.
But a recent drop in gasoline futures pointed to a fall in prices at the pump, which could ease the strain on consumers. US gasoline futures on Wednesday suffered the biggest daily drop since September 2008, with the June contract settling at US$3.1228 a gallon, losing 25.69 cents, or 7.6 percent.
Consumer spending grew 2.7 percent in the first three months of 2011, braking from a 4 percent pace in the October-December quarter, according to the Commerce Department's first estimate of gross domestic product released last month.
But upward revisions to March's figures suggested spending might have been stronger than initially thought.
Other data yesterday showed new claims for unemployment benefits fell 44,000 last week to 434,000, but they remained too high to signal a strong labor market recovery.
Retail sales added 0.5 percent after an upwardly revised 0.9 percent gain in March as receipts at gasoline stations and grocery stores rose strongly, the US Commerce Department said. Economists had eyed a 0.6 percent rise.
Excluding gasoline, retail sales rose 0.2 percent.
It was the 10th straight monthly increase in sales and showed US households exhibiting some resilience to lofty food and gasoline prices, which robbed spending from other areas.
"The rise in retail sales was basically related to higher gasoline prices. Overall the report was good because it was positive, but the economy and consumers are still having trouble," said Eugenio Aleman, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Separately, the Labor Department said producer prices rose 0.8 percent in April, after a 0.7 percent rise in March. Economists had expected a 0.6 percent rise.
Financial markets showed little reaction to the economic reports. US stocks were lower as falling commodity prices raised questions about the strength of the global economic recovery, while Treasury debt was little changed and the dollar was higher.
The retail data implied consumer spending, which accounts for 70 percent of US economic activity, got off to slow start in the second quarter as household budgets remained stretched by high food and energy prices.
But a recent drop in gasoline futures pointed to a fall in prices at the pump, which could ease the strain on consumers. US gasoline futures on Wednesday suffered the biggest daily drop since September 2008, with the June contract settling at US$3.1228 a gallon, losing 25.69 cents, or 7.6 percent.
Consumer spending grew 2.7 percent in the first three months of 2011, braking from a 4 percent pace in the October-December quarter, according to the Commerce Department's first estimate of gross domestic product released last month.
But upward revisions to March's figures suggested spending might have been stronger than initially thought.
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