New applications for U.S. jobless benefits increased more than expected last week, but the number of Americans on unemployment rolls fell to its lowest level since 1973, pointing to diminishing labor market slack.
Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 222,000 for the week ended May 12, the Labor Department said on Thursday. Claims data for the prior week was unrevised. Economists polled by Reuters had forecast claims rising to 215,000 in the latest week.
The labor market is viewed as being close to or at full employment, with the jobless rate near a 17-1/2-year low of 3.9 percent. The unemployment rate is within striking distance of the Federal Reserve’s forecast of 3.8 percent by the end of this year.
The Labor Department said claims for Maine and Colorado were estimated last week. It also said claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal after the territories were devastated by Hurricanes Irma and Maria last year.
The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 213,250 last week, the lowest level since December 1969.
The claims data covered the survey period for the nonfarm payrolls portion of May’s employment report.
The four-week average of claims fell 18,250 between the April and May survey periods, suggesting solid job growth. Nonfarm payrolls increased by 164,000 jobs in April after rising by 135,000 in March. Job gains are slowing as employers struggle to find skilled workers.
There were a record 6.6 million unfilled jobs in March, according to government data published last week.
The claims report also showed the number of people receiving benefits after an initial week of aid declined 87,000 to 1.71 million in the week ended May 5, the lowest level since December 1973. The four-week moving average of the so-called continuing claims dropped 39,750 to 1.77 million, also the lowest level since December 1973.
Declining continuing claims underscore tightening labor market conditions and bolster economists’ expectations that wage growth will accelerate in the second half of the year.