The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained strength in the labour market despite a sharp slowdown in hiring last month.
Other data yesterday showed wholesale inventories recorded their biggest increase in 10 months in April, which is expected to boost second-quarter economic growth.
That rise came even as sales at wholesalers rose for a second straight month.
Initial claims for state unemployment benefits declined 4,000 to a seasonally adjusted 264,000 for the week ended June 4, the Labour Department said.
“Firms do not appear to be shedding labour.
We expect hiring activity to resume in the coming weeks and lead an overall rebound in net employment growth,” said Jesse Hurwitz, an economist at Barclays in New York.
Economists polled by Reuters had forecast initial claims rising to 270,000 in the latest week.
Claims have now been below 300,000, a threshold associated with a strong job market, for 66 straight weeks, the longest streak since 1973.
The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 7,500 to 269,500 last week.
The dollar held earlier gains versus a basket of currencies after the data, while prices for US Treasuries rose.
US stocks were trading lower.
The number of Americans still receiving benefits after an initial week of aid dropped in the week ending May 28 to the lowest level since October 2000.
The insured unemployment rate fell one-tenth of a percentage point to a record low of 1.5%.
The claims report offered the latest sign that the labour market remains strong even though the economy added only 38,000 jobs in May, the smallest gain since September 2010.
A report on Wednesday showed job openings hitting a nine-month high in April and layoffs falling to their lowest level since September 2014.
“The underlying trend to a tighter labour market remains intact.
It seems clear that the problem with the jobs market is hiring new employees that are suitable for available positions, which in itself is a sign of labour market tightness,” said John Ryding, chief economist at RDQ Economics in New York.
The health of the labour market will likely determine the timing of the next Federal Reserve interest rate increase.
Fed Chair Janet Yellen this week reiterated the US central bank’s desire to raise rates, but gave no hints on when that might happen.
Before May’s dismal jobs report, Yellen had signalled rates would rise “in coming months” if economic data continued to suggest that growth was picking up in the second quarter.
The Fed lifted its benchmark overnight interest rate in December for the first time in nearly a decade. In a separate report, the Commerce Department said that wholesale inventories increased 0.6% in April after rising 0.2% in March.
Economists polled by Reuters had forecast wholesale inventories nudging up 0.1% in April.
Sales at wholesalers jumped 1.0% in April after advancing 0.6% in March.
With sales increasing solidly for a second straight month, it would take wholesalers 1.35 months to clear shelves, down from 1.36 months in March.
Inventories are a key component of gross domestic product changes.
The component of wholesale inventories that goes into the calculation of GDP — wholesale stocks excluding autos — increased 0.8% in April.
That could prompt economists to raise their second-quarter GDP growth estimates, which are currently around a 2.5% annualised rate.
The economy grew at a 0.8% pace in the first quarter.
Inventories have been a drag on GDP growth since the third quarter of 2015.
Businesses accumulated record inventory in the first half of 2015, which outstripped demand.
Though the pace of accumulation slowed, inventories remained high in the second half of 2015 and the first quarter of 2016.