NEW US claims for jobless aid rose last week while consumer prices notched their largest decline in nearly 1-1/2 years in May, suggesting interest rates will remain ultra low to nurse the fragile economic recovery.
Fears that growth could be slowing were heightened yesterday by a report showing factory activity in the country’s Mid-Atlantic region braked to its slowest pace in 10 months in June. The employment gauge fell to its lowest level since November.
Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 472,000 as manufacturing, construction and education sectors shed workers, the Labour Department said.
Financial markets had expected claims to fall to 450,000. Last week’s data was in the survey period for the government’s closely monitored employment report for June. A Labour Department official said states had reported claims in manufacturing, construction and education sectors.
In a second report, the department said its seasonally adjusted Consumer Price Index fell 0.2 per cent last month, the largest decline since December 2008, after dipping 0.1 per cent in April.
The Philadelphia Federal Reserve Bank’s business activity index dropped to 8.0 in June from 21.4 in May. That was well below economists' expectations for 20.9.
The Conference Board’s leading index, which tries to predict future levels of economic activity, rose 0.4 per cent to a record 109.9 in May, after stagnating in April, another report showed.
City A.M. Reporter