New applications for U.S. unemployment benefits increased more than expected last week, but remained below a level consistent with a healthy labor market.
Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 234,000 for the week ended May 19, the Labor Department said on Thursday. Claims data for the prior week was revised to show 1,000 more applications received than previously reported.
Economists polled by Reuters had forecast claims slipping to 220,000 in the latest week. Claims have held below the 300,000 mark, which is associated with a strong jobs market, for 168 consecutive weeks, the longest such stretch since 1969.
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.
Tightening labor market conditions and rising inflation will likely keep the U.S. central bank on track to increase interest rates next month.
Minutes of the Fed’s May 1-2 policy meeting published on Wednesday showed most officials believed “that if incoming information broadly confirmed their current economic outlook, it would likely soon be appropriate … to take another step in removing policy accommodation.”
The Fed raised borrowing costs in March and has forecast at least two more rate hikes for this year.
The Labor Department said claims for Maine 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, increased 6,250 to 219,750 last week.
The claims report also showed the number of people receiving benefits after an initial week of aid increased 29,000 to 1.74 million in the week ended May 12. The four-week moving average of the so-called continuing claims fell 23,250 to 1.75 million, the lowest level since December 1973.
The continuing claims data covered the week of the household survey from which May’s unemployment rate will be calculated.
The four-week average of continuing claims fell 97,250 between the April and May survey periods. The unemployment rate fell two-tenths of a percentage point in April after being stuck at 4.1 percent for six straight months.