Fewer Americans filed new claims for unemployment benefits last week as the labour market recovery gains steam amid an economic boom.

This is being fueled by a rapidly improving public health situation and massive government financial assistance.

Initial claims for state unemployment benefits totaled a seasonally adjusted 498,000 for the week ended May 1 compared to 590,000 in the prior week, the Labor Department said today.

That was the lowest level since mid-March 2020, when mandatory shutdowns of nonessential businesses were enforced to slow the first wave of Covid-19 infections.

Economists polled by Reuters had forecast 540,000 applications in the latest week.

The US government has provided nearly $6 trillion in pandemic relief over the past year. Americans over the age of 16 are now eligible to receive the Covid-19 vaccine, leading states like New York, New Jersey and Connecticut to lift most of their coronavirus capacity restrictions on businesses.

Reports this week showed private employers hired the most workers in seven months on April, while a measure of services industry jobs rose to a more than a two and a half year high.

Consumers' perceptions of the labour market are the strongest in 13 months.

Labour market strength was reinforced by a separate report today from global outplacement firm Challenger, Gray & Christmas showing job cuts announced by US-based employers fell 25% in April to 22,913, the fewest since June 2000.

Planned layoffs so far this year are down 84% from the same time in 2020.

The reports bolstered expectations for another month of blockbuster job gains in April.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 978,000 jobs last month after rising by 916,000 in March.

That would leave employment about 7.4 million below its peak in February 2020.

Estimates range from as low as 656,000 to as high as 2.1 million jobs.

The Labor Department will publish April's employment report tomorrow.

"The good news is that employers are no longer undergoing massive cuts, consumers are beginning to feel safe traveling and spending, and the number of job openings is edging higher," said Andrew Challenger, senior vice president at Challenger, Gray & Christmas.

"The bad news is we're experiencing a labour shortage despite the millions of Americans still out of work," he added.

Jobless claims have dropped from a record 6.149 million in early April 2020. They are, however, well above the 200,000 to 250,000 range viewed as consistent with a healthy labor market.

Part of the elevation has been blamed on fraud as well as the enhancement of the unemployment benefits programmess, including a weekly $300 subsidy, which could be encouraging some people to attempt to file a claim for assistance, though not every application is approved.

The generous aid has also been blamed for worker shortages across many industries.

"Over the next few months, most people who want a job should have a chance to get one," said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.

"The only thing that would limit the increase in payrolls is that the government is paying more to be on the unemployment rolls than the private sector is paying to work at their businesses. The choice is clear, at least until the enhanced benefits run out," he added.