Retail Sales, Import Prices Rise; Jobless Claims Fall

By John S. McClenahen March 11's U.S. economic data were remarkable for their lack of big surprises. In line with what economists expected, the U.S. Commerce Department reported retail sales in February rose 0.6% to $327.2 billion. The price of goods the U.S. imports from abroad rose 0.4% last month, the U.S. Labor Department reported, an increase that also was widely anticipated. And initial claims for unemployment insurance last week fell to 341,000, a decline of 6,000 claims from the previous week's revised figure of 347,000, the Labor Department said. The department's four-week moving average of initial claims also fell last week, declining to 345,750, some 6,750 less than the previous week's revised average of 352,500. UBS Investment Research, New York, says consumer spending, which accounts for about two-thirds of all U.S. economic activity, is running half a percentage point below the 4.1% annual rate it's incorporated into its first-quarter 2004 GDP forecast. ". . . We are still hopeful that stronger [tax] refunds over the next few months will help to underpin household spending. So far, the help from refunds has been limited," UBS says. Meanwhile, the decline in the value of the U.S. dollar against other major currencies is starting to "make more of a difference" in import prices, says UBS. "The question now is how long it will take those pressures to lift prices at the consumer goods level." A "very slow slide" in initial claims for unemployment insurance is consistent with an upward trend in hiring, UBS believes. Indeed, a survey released by Accenture on March 11 showed that 83% of U.S. companies plan to hire during the next three months.

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