The number of Americans filing new claims for unemployment benefits rose slightly more than expected last week, but the underlying trend continued to suggest the labor market was tightening.
The jobs market is strengthening despite a sluggish economy that has been characterized by tepid consumer spending, as well as weak business investment and manufacturing activity.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 274,000 for the week ended May 16, the Labor Department said on Thursday. Claims for the prior week were unrevised.
Despite last week's increase, claims remained below 300,000, a threshold associated with a strengthening labor market, for an 11th straight week. Economists polled by Reuters had forecast claims rising to 271,000 last week.
The sturdy labor market keeps the Federal Reserve on track to raise interest rates later this year. Minutes of the U.S. central bank's April meeting released on Wednesday showed most policymakers saw little chance of a June rate hike.
U.S. Treasury debt prices extended gains on the claims data, while the dollar was little changed.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 5,500 last week to 266,250. That was the lowest level since April 2000.
The claims data covered the period during which the government surveyed employers for the payrolls portion of May's employment report. The four-week average of claims fell 18,750 between the April and May survey period, suggesting another month of job growth above 200,000.
Outside the energy sector, which has lost thousands of jobs so far this year as oilfield companies like Schlumberger , Baker Hughes and Halliburton respond to sharply lower crude oil prices, layoffs have been very minimal.
A mix of bad weather, a strong dollar, port disruptions and deep energy spending cuts weighed on the economy in the first quarter, with output barely expanding.
Retail sales and manufacturing data suggest that while activity is picking up, the pace remains modest.
Nonfarm payrolls rose 223,000 in April and the unemployment rate slipped to a near seven-year low of 5.4 percent.
Thursday's claims report showed the number of people still receiving benefits after an initial week of aid fell 12,000 to 2.21 million in the week ended May 9. That was the lowest level since November 2000.
The unemployment rate among people receiving benefits fell 0.1 percentage point to 1.6 percent, the lowest since July 2000.