The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained labour market strength even as the pace of job growth is slowing.
Initial claims for state unemployment benefits decreased 4,000 to a seasonally adjusted 259,000 for the week ended Sept. 3, the lowest level since mid-July, the Labor Department said today.
Claims for the prior week were unrevised.
Economists had forecast first-time applications for jobless benefits rising to 265,000 in the latest week.
It was the 79th week in a row that claims remained below the 300,000 threshold, which is associated with robust labor market conditions.
That is the longest stretch since 1970, when the labour market was much smaller.
Despite very low layoffs, the Federal Reserve is widely expected to keep interest rates unchanged at its upcoming September 20-21 policy meeting in the wake of a slowdown in job growth last month and a contraction in manufacturing activity.
Services sector activity in August was the slowest in six and a half years.
The US Fed raised its benchmark overnight interest rate at the end of last year for the first time in nearly a decade, but has held it steady since amid concerns over persistently low inflation.
A Labor Department analyst said there were no special factors influencing last week's claims data.
However, claims for Virginia, New Mexico, Alabama and Minnesota, as well as those for Hawaii and Puerto Rico were estimated because Monday's Labor Day holiday had caused delays in the processing of the data.
The estimates are based on historical trends and normally do not deviate much from the actual data, the analyst said.
The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 1,750 to 261,250 last week.
As the labour market nears full employment, there is probably not much room for further declines in claims.
A report earlier this week showed job openings hit a record high in July, though hiring continued to lag, suggesting a possible skills mismatch.
The very low level of claims together with all-time high job openings suggests the labour market remains healthy, even though employment growth moderated in August after payroll gains averaged 273,000 jobs per month in June and July.
The economy created 151,000 jobs in August, still well above the roughly 100,000 jobs that Fed Chair Janet Yellen says is needed to keep up with growth in the working age population.
With the labour market near full employment and the economy's recovery from the 2007-09 recession showing signs of aging, the slowdown in job growth is normal.
The claims report also showed the number of people still receiving benefits after an initial week of aid fell 7,000 to 2.14 million in the week ended August 27.
The four-week average of the so-called continuing claims slipped 4,000 to 2.15 million.