Today’s U.S. Producer Price Index and jobless claims numbers will weigh on the side of continued easing by the U.S Federal Reserve Board, economists say.

The U.S. PPI rose just 0.1% in May, below expectations of a 0.3% increase. The core rate, excluding food and energy, was pretty much in line with expectations, up 0.2%. Slides in car and computer prices helped restrain gains.

Last week’s initial jobless claims fell 12,000 to 428,000. But the four-week moving average has climbed yet again to 424,500, a new nine-year high.

BMO Nesbitt Burns observes, “While the labour market continues to soften, there are signs that firms will be forced to cut production further in the months ahead. The inventory-to-sales ratio for businesses climbed to 1.44 in April from 1.43 in the prior month and 1.39 a year ago. While inventories were unchanged in the month, sales fell 0.5%.”

All this likely spells even more cuts to interest rates in the United States. “Business has next to no pricing power, and inflation remains under control. The labour market is still weakening and inventories are too high for comfort. The downside risks for the economy will prompt the Fed to continue easing,” says BMO Nesbitt Burns.