On Thursday February 18, 2010, 9:14 am
WASHINGTON (Reuters) - The number of U.S. workers filing new applications for unemployment insurance unexpectedly surged
last week, while producer prices increased sharply in January, raising potential hurdles for the economic recovery.
Initial claims for state unemployment benefits increased 31,000 to 473,000, the Labor Department said on Thursday. That compared to market expectations for 430,000.
Another report from the department showed prices paid at the farm and factory gate rose a faster than expected 1.4 percent
from December after a 0.4 percent gain in December, as higher gasoline prices and unusually cold temperatures helped boost energy costs.
"When you have PPI moving up and still no progress in the jobs situation
, that doesn't bode well for continued improvement in equity prices," said Alan Lancz, president at Alan B. Lancz & Associates Inc in Toledo, Ohio.
U.S. stock index futures added to losses after jobless claims and producer price data, while government debt prices rose.
Last week was the survey week for the employment report for February, which is scheduled for release in early March.
The labor market, hardest hit by the worst recession in seven decades, has lagged the economic recovery that started in the second half of 2009. The economy has lost 8.4 million jobs since the start of the downturn in December 2007.
The PPI report may give investors, who keeping a wary eye on inflation following massive efforts by the Federal Reserve to pull the economy out of its worst slump since the Great Depression of the 1930s, something to worry about.
"The bottom line is that the Fed is going to have some decisions to make at its next meeting, since it seems inflation is now back on the table," said Lancz.