WASHINGTON (Reuters) - New applications for U.S. jobless benefits fell more than expected last week and the number of Americans on unemployment rolls hit a 17-year low, pointing to a tightening labor market that could encourage the Federal Reserve to raise interest rates next month.
Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 238,000 for the week ended April 29, the Labor Department said on Thursday. The decline unwound most of the prior two weeks’ increases in applications.
Economists say claims were distorted in recent weeks by the Easter holidays and spring breaks, which occur at different dates every year, making it difficult to strip the seasonal fluctuations from the data.
Claims have now been below 300,000, a threshold associated with a healthy labor market, for 113 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 near 10-year low of 4.5 percent.
The Federal Reserve on Wednesday kept its benchmark overnight interest rate unchanged and said it expected labor market conditions would “strengthen somewhat further.”
Officials at the U.S. central bank also viewed the pedestrian 0.7 percent annualized economic growth pace in the first quarter as likely “transitory” and expected economic activity to expand at a “moderate” pace.
Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 247,000 last week.
A Labor Department analyst 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, edged up 750 to 243,000 last week.
The latest claims report has no bearing on April’s employment report, which is scheduled for release on Friday, as it falls outside the survey period.
First-time applications for unemployment benefits were low in April compared to March. According to a Reuters survey of economists, job growth likely rebounded 185,000 following March’s paltry 98,000 gain, which was the smallest in 10 months.
Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid declined 23,000 to 1.96 million in the week ended April 22.
That was the lowest level since April 2000.
The four-week moving average of the so-called continuing claims fell 17,750 to 1.99 million, the lowest level since November 1988.
Reporting By Lucia Mutikani; Editing by Andrea Ricci