Unemployment claims dip to 422,000; retailers report muted May sales

The Labor Department said that the number of people seeking unemployment benefits for the first time dropped 6,000 last week to a seasonally adjusted 422,000. It was the third drop in four weeks. But the declines follow much bigger increases in April.

The four-week average, a less volatile measure, fell for a second week, to 425,500.

Many analysts are downgrading their forecasts for job growth after a spate of disappointing economic reports. Manufacturing grew at the slowest pace in 20 months in May, according to a private survey released Wednesday. Consumers, struggling with higher gas and food prices, are spending less on discretionary items. And businesses sharply cut their spending in April on computers, machinery, and other long-lasting goods, according to a report last week.

Updated at 1:05 p.m.
Stocks slumped Thursday as another round of disappointing data prompted caution ahead of Friday's May jobs report.

At 1:05 p.m., the Dow Jones Industrial Average ($INDU) was down by 30.9 points, or 0.2%, at 12,259. The S&P 500 ($INX) was lower by 1.4 points, or 0.1%, at 1313, and the Nasdaq ($COMPX) was rising by 4.2 points, or 0.1%, to 2,773.

Initial jobless claims dipped to 422,000 in the week ended May 28 from the prior week's 428,000. The decline of 6,000 claims was less than the drop of 11,000 claims economists had expected, according to Briefing.com.