US labor market gradually losing steam; producer inflation cooling

The number of Americans filing new claims for unemployment benefits increased more than expected last week, further evidence that labor market conditions were gradually easing as higher borrowing costs dampen demand in the economy.

The slowing momentum in the economy was underscored by other data from the Labor Department on Thursday showing producer prices falling by the most in nearly three years in March, with sticky services inflation subsiding. Still, the labor market and inflation are likely not cooling fast enough to stop the Federal Reserve from raising interest rates one more time next month.

“Fed officials couldn’t ask for better data today as the economy looks like it is running out of gas finally after a year of rate hikes,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Fed officials thought the economy might slow after the banking crisis and now it appears that the slowdown is happening.”

Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 239,000 for the week ended April 8. Economists polled by Reuters had forecast 232,000 claims for the latest week.

Unadjusted claims increased 27,457 to 234,577 last week, with filings in California surging 11,388. There were also significant gains in claims in New Jersey, Pennsylvania, Texas, New York and Connecticut. That offset a notable decline in Ohio.

This report’s information was first seen on REUTERS; to read more, click this link.