Economic News

Retail sales flopped in May. They fell by 0.1% and by 0.1% excluding autos. The strength in car sales just did not appear. To make matters worse, the past two months of retail sales saw downward revisions of significant magnitude. Weakness was widespread. Sales linked to housing were the most resilient. The downward revision to past months hit the restaurant businesses the hardest. On top of this, the CNW survey reported weak car sales for the first 10 days of June, with a decline in their traffic index too. Jobless claims rose unexpectedly by 1,000 in the June 7 week to a 339,000 pace. Labor Department officials still blame the post holiday seasonal factors for their inability to fix the reason that claims did not return to `normal levels.' The number of unemployment benefit recipients rose by 20,000 this week, but last week's reported rise of 77,000 was revised to a smaller rise of 55,000, leaving the number of benefit recipients just 3,000 higher than that originally reported for last week. There is scant evidence of a deteriorating job market in this report. The insured unemployment rate stands at 2.0%. Labor market conditions appear largely unchanged over recent weeks. The weekly ABC News Consumer Comfort index climbed to another high in the June 7 week. The index posted a 1-point gain from last week's 10-year high.

Robert A. Brusca, Chief Economist
The Nikko Securities Co. International, Inc.
One World Financial Center, Tower A
200 Liberty Street,
New York, New York

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