U.S. Jobless Claims Drift Higher

New applications for jobless benefits south of the border increased more than expected last week, but the number of Americans on unemployment rolls fell to its lowest level since 1973, pointing to diminishing labour market slack.

Figures released by the U.S. Labor Department Thursday showed initial claims for state unemployment benefits rose 11,000 to a seasonally-adjusted 222,000 for the week ended May 12. Claims data for the prior week was unrevised. Economists had forecast claims rising to 215,000 in the latest week.

The labour market is viewed as being close to or at full employment, with the jobless rate near a 17-1/2-year low of 3.9%. The unemployment rate is within striking distance of the Federal Reserve's forecast of 3.8% by the end of this year.

The department said claims for Maine and Colorado were estimated last week. It also said claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal after the territories were devastated by Hurricanes Irma and Maria last year.

The four-week moving average of initial claims, viewed as a better measure of labour market trends as the average smooths out week-to-week volatility, fell 2,750 to 213,250 last week, the lowest level since December 1969.