Fresh data signals weakness in US jobs market
The number of Americans filing new claims for unemployment benefits increased to a 10-month high last week, suggesting the labour market was losing momentum and keeping hopes of a September interest rate cut from the Federal Reserve alive. That was reinforced by other data from the Labour Department on Thursday showing producer prices unexpectedly falling in May. The largest decline in prices at the factory gate since last October followed news on Wednesday that consumer prices were unchanged in May. The US central bank on Wednesday kept its benchmark overnight interest rate in the current 5.25 percent-5.5 percent range, where it has been since last July. Fed officials pushed out the start of rate cuts to perhaps as late as December, with policymakers projecting only a single quarter-percentage-point reduction for this year. Economists, however, remained optimistic that the Fed would reduce borrowing costs twice this year, starting in September. "These data nudge the door a little wider open for the Fed to start cutting interest rates later this year," said Bill Adams, chief economist at Comerica Bank. Initial claims for state unemployment benefits jumped 13,000 to a seasonally adjusted 242,000 for the week ended June 8, the highest level since last August, the Labour Department said. Economists polled by Reuters had forecast 225,000 claims in the latest week. It was the third straight weekly rise in claims, leading some economists to believe that cracks were forming in the labour market.  Others blamed the rise on lingering volatility related to the Memorial Day holiday in late May. (Reuters)