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Unemployment claims, retail sales hint at recovery

Several of the nation's biggest retailers said Thursday they had strong sales gains in May as a spring heat wave sent shoppers in search of summer clothing. And the government said Tuesday the number of Americans filing new claims for unemployment benefits fell for the third straight week in May, the first such streak of improvements in more than a year.

"It suggests that the new "R' word is recovery, not recession," said Irwin Kellner, the chief economist at Manufacturers Hanover Trust.

"Evidence that the recession is ending is piling up, and this adds another block to it," added Robert Dederick of the Northern Trust Co. of Chicago.

The Labor Department said 439,000 people filed first-time unemployment claims for the week ended May 25, down 6,000 from the previous week's 445,000.

But the figures released by the merchants still left some economists wondering whether consumers were responding to signs that the recession is easing.

"We're starting to get little signals that things are getting better," said Thomas J. Tashjian, an analyst with First Manhattan Co., an investment company.

Tashjian said store and mall traffic is up, and the size of an average purchase is edging higher.

But Wayne Hood, an analyst with Prudential Securities Inc., said some retailers had a better showing last month "because of favorable weather patterns right now."

Analysts and economists are closely examining consumer spending habits as they try to determine whether the economy is coming out of the recession. Because consumer spending accounts for about two-thirds of the gross national product, the economy cannot recover without the consumer's help.

Discount retailers, including Wal-Mart Stores Inc. and Kmart Corp., were again the industry leaders last month as consumers continued to shop frugally. Moderate-price apparel retailers also reported good gains as higher-than-normal temperatures prompted sales of summer clothes.

Other retailers still found their sales pinched. Dayton Hudson Corp. said results were weighed down by the slumping economy in California, where the department and discount store operator does one-third of its business.

Wal-Mart, the nation's largest retailer, said sales at stores open at least a year rose 13 percent last month from May 1990 levels, while the company's overall sales improved 38 percent.

Business at Kmart, which has been surging this year in response to pricing changes and store renovations, said same-store sales shot up 8.5 percent, while overall sales gained 12.5 percent.

Sears, Roebuck and Co., recently displaced by Wal-Mart as No. 1, said same-store sales slipped 1.3 percent, with overall sales falling 0.4 percent.

J.C. Penney Co. Inc. said same-store sales fell 2.5 percent.