More signs of US slowdown

Has the shock rise in interest rates been enough to ward off recession?

As markets digested the Federal Reserve's surprise cut in interest rates, more indications emerged on Thursday of the underlying weakness of the US economy.

Layoffs at US firms jumped more than 200% in December and the number of Americans putting in claims for new unemployment benefits surged to its highest level in two and a half years last week.

The international job search and executive support firm Challenger, Gray and Christmas said US companies announced 133,713 job losses in December, up 203% from November.

It was the highest % rise in job cuts since the survey began in 1993 and only the fourth time ever that the number of cuts had risen above 100,000 in one month.

Unemployment benefit claims

Meanwhile, new figures from the US Labor department revealed that new claims for unemployment benefits rose for the third week in a row to 375,000 in the week ended 30 December, from 359,000 during the previous week.

The claims were at their highest level since mid-1998 when workers flocked to unemployment offices following a strike at General Motors.

The more stable four-week average of jobless claims rose to 352,250 in the last week of December, compared with 347,000 in the week before.

This was also at its highest since mid-1998.

Both reports were issued less than 24 hours after Alan Greenspan, the chairman of the US central bank, the Federal Reserve, caught traders on the hop and announced a surprise cut in US interest rates.

Stock markets soared after the Fed's announcement on Wednesday with the Nasdaq composite index tallying its largest gain in its nearly 30-year history.

US December employment figures are due to be released Friday morning, which are expected to show more evidence of a slowdown in the jobs market.