US employers cut 159,000 jobs in September, the most in more than five years, Labor Department figures show.

The data also showed the nation’s unemployment rate was steady at 6.1% as more workers were added to the ranks of the unemployed than analysts predicted.

The figures mark the ninth month in a row that the economy has lost jobs.

Meanwhile, revised figures show that employers cut 73,000 jobs in August, slightly less than the 84,000 originally estimated.

But the job losses in July turned out to be a bit deeper – 67,000 versus the 60,000 previously reported.

The number of jobs axed in September was the largest amount since March 2003, when the labour market was still reeling from the 2001 recession.

“The employment figures were weak in every important dimension,” said Pierre Ellis, senior economist at Decision Economics in New York.

“We’ve seen weaker data in history, but these look pretty decisively to be the beginning of something worse. Employment declines were widespread and large.”

Manufacturers shed 51,000 jobs, construction companies cut 35,000 jobs, retailers lost 40,000 posts, business services axed 27,000 positions and financial services slashed 17,000 jobs.

There were also 17,000 posts cut in the leisure and hospitality sector.

The number of jobs being shed outstripped hiring gains by the government in education, health and other sectors.

News reported by The BBC

US consumer prices fell in August for the first time in nearly two years due to lower energy costs, data shows.

Labor Department figures showed the Consumer Price Index (CPI) was 0.1% lower month-on-month, and followed July’s 0.8% increase.

However on a yearly basis, prices were 5.4% higher.

The news comes as the US central bank meets to decide on interest rates, with some analysts saying the drop could make a rate cut more likely.

“If the Fed is thinking of cutting interest rates this afternoon, this gives them a little more freedom to do that,” said Robert McIntosh, lead economist at Eaton Vance.

It had been widely expected that the Federal Reserve would opt to leave interest rates on hold at 2%.

But in light of significant turmoil in the financial markets, and uncertainty over the health of the world’s largest economy, there are expectations that the central bank could lower rates.

The demise of Lehman Brothers and uncertainty over the future of insurance giant AIG, as well as the acquisition of Merrill Lynch by Bank of America have all added to market jitters.

News reported by The BBC

US inflation accelerated at its fastest pace in 17 years in June, official figures have shown, driven higher by surging energy prices.

Consumer prices were 5% higher than a year ago and rose 1.1% on a monthly basis, the Labor Department said.

Federal Reserve boss Ben Bernanke has warned that the threat of rising inflation has intensified recently.

Minutes from the Fed’s latest meeting on interest rates indicated the next move in borrowing costs could be up.

It faces the dilemma of having to stem the rise in inflation while not further choking an economy under serious strain.

‘Fed in a hole’

June’s annual inflation increase was the highest since 1991 while the monthly jump is the sharpest since September 2005.

In his second day of congressional testimony on Wednesday, the Fed boss said inflation was too high and it was a key objective for the central bank to bring it down.

Many analysts now believe that the central bank may have to leave borrowing costs on hold, or even increase them, as it tries to steer a faltering economy through turbulent times.

“This increases concern that the Fed is not going to be able to lower interest rates if the economy remains weak” Gary Thayer, from Wachovia Securities

At the same time as inflationary pressures are rising, the US faces a severe housing slump, a credit crunch and financial market turmoil stemming from the collapse of the sub-prime mortgage market.

According to minutes of the Fed’s interest rate meeting in June, policymakers believed “the next change in the stance of policy could well be an increase” due to “upside risks to inflation and inflation expectations”.

The impact of surging living costs in June “really puts the Fed in a hole,” said Alan Ruskin, an economist at RBS Greenwich.

Gary Thayer, from Wachovia Securities, agreed that the Fed was facing a tricky balancing act.

“This increases concern that the Fed is not going to be able to lower interest rates if the economy remains weak.”

But he added: “And as long as the economy remains weak, it will be hard for the Fed to raise rates to fight inflation.”

Energy surge

Energy prices were the main driver of price growth, and were 6.6% higher in June as the cost of petrol, natural gas and heating oil increased.

Expectations that that a slowing US economy will dampen demand for oil helped crude prices drop 42 cents to $138.32 in pre-market trade in New York.

Annual core inflation, which strips out volatile fuel and food prices, touched 2.4%.

The surge in living costs has dented the earning power of Americans.

Average weekly wages, after adjusting for inflation, fell by 0.9% in June – the biggest monthly decline in 24 years, the Department said.

News reported by BBC