Weekly jobless claims increase 2,000 to 230,000
Continuing claims rise 5,000 to 1.850 million
Producer prices climb 0.2 in August; up 1.7 yearonyear

WASHINGTON, Reuters The number of Americans filing new applications for unemployment benefits increased marginally last week, suggesting that layoffs remained low even as the labor market is slowing.

Other data from the Labor Department on Thursday showed producer prices rising slightly more than expected in August amid a rebound in the cost of services. The combination of a fairly stable labor market and stillhigh inflation further diminished the chances of the Federal Reserve cutting interest rates by 50 basis points next Wednesday, when the U.S. central bank is expected to start its longawaited easing cycle.

The reports followed data this month showing the unemployment rate retreated in August from a near threeyear high touched in July and underlying inflation indicating some stickiness last month. Financial markets have slashed the odds of a halfpoint rate reduction to less than 15.

Producer prices are not too hot and the employment markets are not deteriorating too much either, so there is probably no need for Fed officials to surprise the markets with a bigger thanexpected 50 basis points rate cut next week, said Christopher Rupkey, chief economist at FWDBONDS.

Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 230,000 for the week ended Sept. 7. Economists polled by Reuters had…