May Retail Sales Down 0.9%; PPI Dips 0.4%

May economic reports released Thursday show retail sales down 0.9% and producer prices down 0.4%, raising new doubts about the strength of the recovery.

Trucking is sensitive to economic fluctuations and its profits are affected by changes in the economy.

In another report released Thursday, the Labor Department said new claims for unemployment insurance rose by 6,000 to 390,000 last week.

However, claims remained below the key 400,000 mark, which is a level associated with weakness in the job market, the Associated Press said.

In addition, the number of laid-off workers continuing to draw unemployment benefits fell to 3.77 million for the week ending June 1, down from 3.83 a month earlier.

Meanwhile, Commerce said that slower vehicle sales and lower gasoline prices caused the fall in May's retail sales to $297 billion. Excluding automobiles, sales dropped 0.4%.

The declines were larger than analysts were expecting, Reuters said, and raised questions about how strong consumer demand will be this summer as the economy tries to recover.

The report showed sales at auto and parts dealers dropped 2.5%, while gasoline station sales fell 3.1%. However, sales of electronics and appliances rose 2.1% and furniture stores saw a 0.9% rise.

Labor said PPI, which measures prices paid to U.S. factories, farmers and other producers, fell for the second straight month. It was also the largest decline in five months.

Bloomberg said this is a sign companies are having to charge less to attract customers, which is backed up by May's retail sales report.

Analysts said this report clearly shows inflation does not pose a danger right now, so the Fed does not have to rush to increase interest rates, Bloomberg reported. Many economists are now pushing back predictions as to when the Fed will raise rates from August to at least September.

Excluding the volatile food and energy sectors, the core index of wholesale prices was unchanged, after rising 0.1% the previous month.

Labor said energy prices fell 2.3% last month, the biggest decline since December, and gasoline prices fell 9.6%. Passenger car prices rose 0.4%, but light truck prices fell 0.9%.

Economists were expecting a 0.1% rise in both the PPI and the core rate, Reuters noted. For the 12-month period ended in May, PPI fell 2.7%, while the core rate rose only 0.4%.

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