By Lucia Mutikani
WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose less than expected last week, pointing to sustained strength in the labour market despite trade tensions.
Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 218,000 for the week ended July 28, the Labor Department said on Thursday. Claims dropped to 208,000 during the week ended July 14, which was the lowest reading since December 1969.
Economists polled by Reuters had forecast claims rising to 220,000 in the latest week. The labour market has remained robust despite trade tensions between the United States and its major trade partners, including China, Canada, Mexico and the European Union, which have hurt the stock market.
"Claims had started to move higher in mid-June, leading us to question whether it could be the fallout of protectionist measures," said Blerina Uruci, an economist at Barclays in Washington. "The decline over the past few weeks, however, suggests no such effect on labour markets yet."
The Trump administration has imposed duties on steel and aluminium imports, provoking retaliation by the trade partners. It has also slapped 25 percent tariffs on $34 billion (£26.04 billion) of Chinese imports. Beijing retaliated with matching tariffs on the same amount of U.S. exports to China.
On Wednesday, President Donald Trump proposed a higher 25 percent tariff on $200 billion worth of Chinese imports.
Economists have warned that the tit-for-tat tariffs could disrupt the supply chain and weigh on manufacturing.
For now, the economy is on strong footing. The Federal Reserve on Wednesday left interest rates unchanged while offering an upbeat assessment of both the labour market and economy. The U.S. central bank said "the labour market has continued to strengthen and economic activity has been rising at a strong rate."
The dollar held near two-week highs against a basket of currencies after the claims data. Prices for U.S. Treasuries were trading higher. U.S. stock index futures fell amid the escalating trade tensions.
The Labor Department said only claims for Maine were estimated last week. The four-week moving average of initial claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 3,500 to 214,500 last week, the lowest reading since mid-May.
Last week's claims data has no bearing on July's employment report, which is scheduled for release on Friday, as it falls outside the survey period. According to a Reuters survey of economists, nonfarm payrolls likely rose by 190,000 jobs in July after increasing by 213,000 in June.
The unemployment rate is forecast falling one-tenth of a percentage point to 3.9 percent in July. Job growth averaged 215,000 per month in the first half of this year and the labour market is viewed as being near or at full employment.
The claims report also showed the number of people receiving benefits after an initial week of aid fell 23,000 to 1.72 million in the week ended July 21. The four-week moving average of the so-called continuing claims slipped 4,500 to 1.74 million.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)