The number of U.S. workers filing new claims for jobless benefits surged last week to the highest since October 2005, according to a report Thursday that heightened worries about a possible recession.
The Labor Department said initial claims for state unemployment benefits jumped by 69,000 last week to 375,000. It was the biggest increase since September 2005 and the highest since October of that year, just after Hurricane Katrina devastated the U.S. Gulf Coast.
Separately, the Commerce Department said consumer spending edged up by 0.2 percent in December after a 1 percent gain in November, just enough to keep pace with inflation.
U.S. stocks fell on the news, while the value of the dollar dropped and prices for government debt rose as traders concluded the reading on the jobs market made further aggressive interest rate cuts from the Federal Reserve more likely.
Jobless claims had been on a declining path, one of the few bright signs suggesting the U.S. economy was not deteriorating sharply. While economists took the latest data with a grain of salt, financial markets were not so certain.
Interest-rate futures prices shifted to show about a 90 percent implied chance that the Fed, which has cut benchmark borrowing costs by 1.25 percent points over the past nine days, would lower them by a further half point in March.
A separate report from the Labor Department showed U.S. employment costs rose by 0.8 percent in the fourth quarter, keeping the year-on-year gain at 3.3 percent.
Source: Xinhua
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