The number of Americans filing new claims for unemployment benefits dropped below 400,000 last week for the first time since the Covid-19 pandemic started more than a year ago.

Today's figures pointed to a strengthening labour market despite a worker shortage that is limiting hiring.

Initial claims for state unemployment benefits totaled a seasonally adjusted 385,000 for the week ended May 29, compared to 405,000 in the prior week, the Labor Department said today.

That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of coronavirus infections.

Economists polled by Reuters had forecast 390,000 applications for the latest week.

Another report today from global outplacement firm Challenger, Gray & Christmas showed that while job cuts announced by US-based employers rose 7% last month to 24,586, layoffs were down 93.8% from May 2020.

US employers have announced 192,185 layoffs in the first five months of this year, down 86% compared to the same time in 2020.

The Covid-19 pandemic is subsiding because of vaccinations, allowing authorities to lift restrictions on businesses and accelerating the economy's reopening. That has led to a surge in demand that is pushing against supply constraints.

Businesses across all industries and regions are reporting difficulties finding workers.

The Federal Reserve's "Beige Book" report of anecdotal information on business activity collected from contacts nationwide showed this week that "it remained difficult for many firms to hire new workers, especially low-wage hourly workers, truck drivers, and skilled tradespeople."

An Institute for Supply Management manufacturing survey earlier this week also highlighted the shortages of labour and parts, which it said were causing short-term shutdowns.

Workers are scarce despite nearly 10 million Americans being officially unemployed.

Generous unemployment benefits funded by the government, problems with child care and fears of contracting the virus, even with vaccines widely accessible, as well as pandemic-related retirements have been blamed for keeping workers home.

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

They could decline further as Republican governors in at least 24 states, including Florida and Texas, are cutting off unemployment programmes funded by the federal government for residents starting next Saturday.

These states account for more than 40% of the workforce. The benefits being terminated early include a weekly $300 unemployment subsidy, which businesses say is discouraging the jobless from seeking work.

Last week's claims report has no bearing on May's employment report scheduled for release tomorrow as it falls outside the period during which the government surveyed businesses and households for the nonfarm payrolls data and unemployment rate.

According to a Reuters survey of economists, payrolls likely increased by 650,000 jobs last month after rising only 266,000 in April. But worker shortages could again limit hiring in May.

The US jobless rate is expected to fall to 5.9% from 6.1% in April.