The number of Americans filing for unemployment benefits fell more than expected last week, pointing to shrinking labor market slack that could allow the Federal Reserve to raise interest rates again this year despite moderate inflation growth.
Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 237,000 for the week ended June 10, the Labor Department said on Thursday.
Data for the prior week was unrevised. Claims have unwound nearly all the jump in late May that was blamed on difficulties adjusting the data around moving holidays. Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 242,000 in the latest week.
Claims have now been below 300,000, a threshold associated with a healthy labor market, for 119 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is near full employment, with the jobless rate at a 16-year low of 4.3 percent.
The Fed on Wednesday raised its benchmark overnight interest rate by 25 basis points, the second rate hike this year, saying it expected economic activity to expand at a moderate pace and labor market conditions to strengthen somewhat further.
The U.S. central bank acknowledged the recent retreat in price pressures, which has pushed inflation well below the Fed's 2 percent target.
A Labor Department official said there were no special factors influencing the claims data. Only claims for Louisiana and Hawaii were estimated.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,000 to 243,000 last week. While monthly job growth has slowed, record high job openings suggest that is likely because companies cannot find qualified workers.
Thursday's claims report also showed the number of people still receiving benefits after an initial week of aid increased 6,000 to 1.94 million in the week ended June 3. The so-called continuing claims have now been below 2 million for nine straight weeks, pointing to diminishing labor market slack.
The four-week moving average of continuing claims rose 9,000 to 1.93 million, remaining below the 2 million mark for seven consecutive weeks.