WRAPUP 2-U.S. jobless claims fall, retail sales stronger

 * Initial claims fall 10,000 last week, four-week avg dips
 * Continuing claims lowest since October 2008
 * Retailer sales stronger than expected in March
 (Adds details throughout, byline)
 By Lucia Mutikani
 WASHINGTON, April 7 (Reuters) - New U.S. claims for jobless
benefits fell last week and retailers racked up much
stronger-than-expected sales in March, signs that high fuel
prices have not knocked the economy off its growth path.
 Initial claims for state unemployment aid slipped 10,000 to
382,000, the Labor Department said on Thursday, a touch below
economists' expectations and firmly beneath the 400,000 level
associated with steady jobs growth.
 Other data showed shoppers shrugged off higher gasoline
prices last month to boost sales at many retailers as improving
labor market conditions encouraged discretionary spending.
 Same-store retailer sales had been expected to decline for
the first time since August 2009, in part because Easter falls
three weeks later than last year, delaying some spending.
 "The claims report is one more piece of evidence that the
general labor market is improving," said Patrick O'Keefe, head
of economic research at J.H. Cohn in Roseland, New Jersey.
 "The economy is growing and employers are no longer laying
off workers because of a weakening in the general economic
conditions but rather they doing so for normal business
reasons."
 The claims data underscored the strengthening labor market
tenor and came on the heels of a report last week showing
employers added 216,000 jobs in March, with the unemployment
rate falling to a two-year low of 8.8 percent.
 Last week, the four-week average of unemployment claims, a
better measure of underlying trends, fell 5,750 to 389,500.
 With the labor market conditions firming, consumers are
feeling a little more confident to loosen their purse strings.
 Sales at stores open at least a year rose 1.7 percent in a
tally of 25 retailers, topping expectations of a 0.7 percent
decline, according to Thomson Reuters. [ID:nN07294366]
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 INSTANT VIEW on jobless claims: [ID:nN0783184]
 Graphics:
 US jobless claims: http://r.reuters.com/ger88r
 U.S. March same-store sales: http://r.reuters.com/wer88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 GASOLINE TO DISTORT RETAIL SALES
 The stronger-than-expected same-store sales bode well for
the government's overall retail sales report for March, which
is scheduled for release next week and is expected to be
heavily influenced by the high gasoline prices.
 They offered some relief after other data on consumer
spending suggested a moderation in the pace of economic growth
early in the year after a fairly brisk pace in the fourth
quarter.
 Consumer spending -- which accounts for about 70 percent of
U.S. economic activity -- got off to slow start in the first
two months of 2011 -- held back by bad weather. Rising gasoline
prices also took spending away from other sectors.
 The stronger-than-expected same-store sales were little
boosted by inflation, given the nature of the merchandise which
economists said was less sensitive to the high energy prices.
  "Consumers have held back for a long time, there is a
certain amount of pent-up demand. Wage growth isn't much, but
we are also seeing an increase in income because of an increase
in job growth," said Steve Blitz, a senior economist at ITG
Investment Research in New York.
 "Job growth also means that for those who are employed
there is reduced concern about being laid off so the pent up
demand is coming out."
 With the latest fall, initial claims for jobless benefits
are now beneath the 400,000 level, which is generally
associated with steady job growth, for four weeks in a row.
 The four-week average has held below that mark for the
sixth straight week. Economists say both measures need to drop
to about 300,000 to signal a strong labor market recovery.
 Signs of improvement in the jobs market were also evident
in the number of people still receiving benefits under regular
state programs after an initial week of aid, which fell in the
week ended March 26 to the lowest level since October 2008.
 However, long-term unemployment remains a major problem.
 A total of 8.52 million people were claiming unemployment
benefits under all programs in the week ended March 19, the
latest week for which data is available.
 "While the labor market has stabilized and employment may
be increasing, it's not increasing so rapidly that previously
unemployed people who were claiming benefits are returning to
work at a fast clip," said J.H. Cohn's O'Keefe.
 (Additional reporting by Jessica Wohl in Chicago; Editing by
Neil Stempleman)



WRAPUP 2-U.S. jobless claims fall, retail sales stronger