US Economy: Jobless Figures Provide Cheer Despite Retail Woe

13 January 2003

New reports bear mixed tidings for the US economy, with upbeat jobless figures diverting attention from confirmation of weak holiday sales.

Investors were encouraged by figures from the Labor Department showing that new claims for unemployment benefits dropped 19,000 to below the psychologically important 400,000 mark. At 389,000, the reading was the lowest since December 21.

The data raised hopes that lay-offs are stabilising. The Dow Jones Industrial Average subsequently jumped 180 points, making up for a 178-point decline over the previous two sessions.

However, less positive news was released by retailers, who confirmed that this year’s holiday shopping season was the worst for years.

December sales in stores open at least a year rose a paltry 1% on the same month in 2001, according to a retail index from Goldman Sachs, as the hoped-for last-minute spending spree largely failed to materialise.

Among individual retailers, discount giant Wal-Mart posted December same-store growth of just 2.3%, in line with revised predictions but still its slowest monthly increase for two years. Rival budget operator Target saw sales dip 0.3%, and there were also falls for department store groups Sears Roebuck (4.6%) and Federated (2.6%).

Some retailers bucked the trend, notably Gap, which beat analysts’ estimates with a 5% rise, and J C Penney, up 4.7%.

Data sourced from: multiple sources; additional content by WARC staff