New claims for jobless benefits decline to lowest level in a year

WASHINGTON (AP) -- The number of U.S. workers filing new claims for unemployment insurance plunged last week to the lowest level in a year, an encouraging sign amid a sluggish labor market.

The Labor Department reported Thursday that new claims dropped by a seasonally adjusted 32,000 to 383,000 for the week ending June 1.

But the bigger-than-expected drop might have been exaggerated by seasonal adjustment factors related to the Memorial Day holiday, analysts cautioned.

"More evidence will be required to conclude that the job market is truly on the road to recovery," said Maury Harris, chief economist at UBS Warburg.

In another report, many of the nation's biggest retailers reported disappointing sales in May as usually cool weather stifled consumer demand for shorts, T-shirts and other seasonable merchandise.

But some companies including Kohl's Corp. reported solid sales and Wal-Mart Stores Inc. had better-than-expected business. Many other merchants, particularly department stores and apparel chains including May Department Stores Inc. and Federated Department Stores Inc., had lackluster sales.

On Wall Street, stocks sagged, pulled lower by the retail sales report. The Dow Jones industrial average was off 85 points and the Nasdaq index was down 27 in morning trading.

With last week's decline, new jobless claims have fallen for three weeks straight and are now at their lowest level since May 5, 2001.

The more stable four-week moving average of new claims declined last week to 411,250, the lowest level since late March.