New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans receiving unemployment aid hit a 28½ -year low, pointing to rapidly shrinking labor market slack.
Initial claims for state unemployment benefits decreased 4,000 to a seasonally adjusted 232,000 for the week ended May 13, the Labor Department said on Thursday. That pushed claims close to levels last seen in 1973.
Data for the prior week was unrevised and claims have now decreased for three consecutive weeks. Economists polled by Reuters had forecast first-time applications for jobless benefits
rising to 240,000.
Claims have now been below 300,000, a threshold associated with a healthy labor market, for 115 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is close to full employment, with the
unemployment rate at a 10-year low of 4.4 percent.
A Labor Department official said there were no special factors influencing last week’s data and only claims for Louisiana had been estimated.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 240,750 last week, the lowest level since February.
Last week’s claims data covered the survey week for May’s nonfarm payrolls. The four-week average of claims fell 2,000 between the April and May survey periods suggesting further job gains this month. The economy created 211,000 job in April after adding only 79,000 positions in March.
Labor market strength and tightening could allow the Federal Reserve to raise interest rates next month.
Expectations of a June rate hike have also been supported by data such as retail sales and industrial production, which suggested that economic growth picked up early in the second quarter after rising at an anemic 0.7 percent annualized rate in the first quarter.
The U.S. central bank increased its benchmark overnight interest rate by 25 basis points in March and has forecast two more increases this year.
Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid dropped 22,000 to 1.90 million in the week ended May 6, the lowest level since November 1988.
The so-called continuing claims have remained below 2 million for five straight week. The four-week moving average of continuing claims declined 20,000 to 1.95 million, the lowest level since January 1974.