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.