Jobless Claims Fall by 2,000 Last Week

A clerk unlocks a case of high-end jewelry and watches at a Costco Wholesale Corp. warehouse store south of downtown Seattle in this May 30, 2006 file photo. Retail sales growth stalled in June, 2006, leaving merchants wondering whether shoppers who were resilient for much of the year are now curbing their spending because of higher gas prices. (AP Photo/Ted S. Warren, File) (Ted S. Warren - AP)

WASHINGTON -- The number of Americans filing new claims for unemployment benefits declined slightly last week, indicating continued strength in the labor market despite a spring slowdown in the economy.

The Labor Department said Thursday that applications for jobless benefits totaled 313,000 last week, a drop of 2,000 from the previous week. Economists had forecast that jobless claims would rise by 2,000.

In other economic news, the nation's retailers reported that sales stalled in June as soaring gasoline prices prompted shoppers to curb their spending on other items.

As the nation's retailers began reporting their monthly sales early Thursday, disappointments included Wal-Mart Stores Inc., Costco Wholesale Corp. and Limited Brands Inc. Retailers who reported solid sales included Bebe Stores Inc. and Children's Place Retail Stores Inc.

June is considered the second most important month of the year in a retailer's calendar behind December. It is a month when merchants start to clear out summer goods to make room for fall merchandise.

In a third report, the Institute for Supply Management said its index of activity in the service industry, where most Americans are employed, dipped in June to a weaker-than-expected reading of 57.

That was down from a reading of 60.1 in May and provided further evidence, analysts said, that the economy is slowing.

"The economy is still growing decently. It's just that it is not surging," said Joel Naroff, chief economist at Naroff Economic Advisors, a private consulting firm.

On Wall Street, the Dow Jones industrial average gained 73.48 points to close at 11,225.30.

The government is scheduled to report new unemployment figures on Friday. Analysts are expecting the jobless rate to remain at 4.6 percent and they believe businesses created 160,000 new jobs in June. That would be a significant rebound after only 75,000 jobs were created in May, the smallest gain in seven months.

Economists believe the weak job growth in May overstated the slowdown in the job market, but they are looking for more moderate gains in employment in the months ahead as the economy slows from the sizzling pace of the first three months of the year, when the economy expanded at a 5.6 percent rate.

A number of recent indicators have provided evidence that the economy slowed in the spring under the impact of surging gasoline prices, rising interest rates and a cooling housing market.