There were new signs Thursday that the economy could be bottoming out. The government said new claims for unemployment fell to their lowest level in more than three months last week. And retailers said they saw a better-than-expected month in April.
The Labor Department said jobless claims fell by 34,000 to 601,000 last week, a surprise to many analysts, who had expected a slight uptick. New claims peaked at 674,000 in late March.
But the department said the total number of Americans taking jobless benefits hit another record high of 6.35 million — a sign that the job market remains weak.
Productivity Rebounds
The department also reported that productivity, a measure of employee output per hour, rose at a 0.8 percent annual rate, compared with the 0.6 percent decline reported for the fourth quarter. Labor costs climbed 3.3 percent, compared with a 5.7 percent gain in the previous three months.
The improvement in productivity was the likely result of massive layoffs that have occurred as businesses try to cope with the prolonged recession.
The government reported gross domestic product contracted at an annual rate of 6.1 percent in the first three months of this year after falling by 6.3 percent in the fourth quarter of 2008. It was the worst half-year performance in 50 years.
Retailers See Flowering April Sales
Of the 31 retailers that reported April sales at stores open at least a year, 64 percent topped Wall Street estimates and a handful said they plan to report better first-quarter results than they had expected.
Overall sales rose 1.2 percent, surprising analysts who expected a decline of 0.2 percent, according to Thomson Reuters estimates. Excluding Wal-Mart, sales fell 2.7 percent, which was still better than the 3.4 percent decline analysts expected.
The better numbers for retailers come as Congress considers strengthening new Federal Reserve guidelines for issuers of credit cards. Among other things, the House and Senate bills include the requirement of a 45-day notice to credit card holders before the terms a contract can be altered and bars a change in terms if customers pay on time.
Focus On Banks
Fed Chairman Ben Bernanke told a Fed conference in Chicago on Thursday that stronger oversight of the banking system is needed to prevent future financial crises.
Bernanke said regulators must not only sharpen their assessments of individual banks, but also examine the financial system as a whole to detect risks that could endanger the normal flow of credit, market operations and commerce.
Bernanke's remarks come as some of the nation's largest banks get the results of government stress tests that are expected to show that the banks need tens of billions of dollars in new cash to survive should the recession deepen. The Treasury Department was to release results of the tests on the 19 largest banks at 5 p.m. Thursday.
From NPR staff and wire reports
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