Weekly jobless claims increase 13,000 to 242,000
Continuing claims jump 30,000 to 1.820 million
Producer prices fall 0.2 in May; up 2.2 yearonyear

WASHINGTON, June 13 Reuters The number of Americans filing new claims for unemployment benefits increased to a 10month high last week, suggesting the labor 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 Labor 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 U.S. central bank on Wednesday kept its benchmark overnight interest rate in the current 5.255.50 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 quarterpercentagepoint 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 Labor Department said.

Economists polled by…