US Morning Indicators Post Expected Improvements

US Morning indicators including retail sales and weekly jobless claims posted expected improvements as the economy shows signs that a bottom is in place. Reaction to the releases is minimal as equity futures are slightly lower while the US dollar has begun to appreciate in the past few hours against the highly watched yen and euro crosses.

[B]Advance Retail Sales[/B] came inline with expectations for a 0.5% gain in May following declines in the past two months. The previous contraction of 0.4% in April was also revised to a smaller 0.2% decline. Excluding automotive, the figure rose 0.5% versus a Bloomberg forecast for 0.2% growth. On an annualized basis, sales remain in a considerable rout with an 11.1% contraction. The improvement in the figure is largely attributed to a resurgence of confidence and higher personal disposable income as tax cut provisions in the $787 stimulus package provide much needed aid to consumers. Of the sectors that make up the broad measure of retail sales, the largest declines were noted in a 2.9% fall in shoe stores, a 1.2% drop in appliances as well as a 1.3% dip in miscellaneous. On the upside is a significant gain of 3.6% in gasoline stations and a 1.3% increase in building materials.

[B]Initial Jobless Claims[/B] narrowed in the week ended June 6 to 601K from 626K in the previous week. Economists polled by Bloomberg had expected the figure to narrow for the fourth month but to a slightly larger 615K. The figure remains relatively high however at above 600,000 for the 19th week as the recession continues for the 19th month with more than six million jobs lost since December 2007. Older data released on demographics shows states leading the declines include California, Pennsylvania and New York. Meanwhile, continuing claims shot up to 6816K from 6757K in the previous week. The measure had narrowed recently for the first time since mid December but more than made up for the temporary improvement by significantly overshooting expectations. The bloomberg forecast anticipated a rise to 6780K. Data that tracks the number of people on unemployment benefits is now at a new record high and well above the 4713K high in 1983.