WASHINGTON: New applications for US jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labour market slack. The economy’s brightening prospects were further boosted by other data on Thursday showing a sharp acceleration in factory activity in the mid-Atlantic region this month. While the raft of upbeat economic data support an interest rate hike next month, the Federal Reserve’s decision will also hinge on the state of financial markets, which have been rattled in recent days by Trump administration scandals. Initial claims for state unemployment benefits decreased 4,000 to a seasonally adjusted 232,000 for the week ended May 13, the Labor Department said. That pushed claims close to levels last seen in 1973. Claims have now decreased for three consecutive weeks. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 240,000. Claims have now been below 300,000, a threshold associated with a healthy labour market, for 115 straight weeks. That is the longest such stretch since 1970, when the labour market was smaller. The labour market is close to full employment, with the unemployment rate at a 10-year low of 4.4 percent. The number of people still receiving benefits after an initial week of aid dropped 22,000 to 1.90 million in the week ended May 6, the lowest level since November 1988. Last week’s claims data covered the survey week for May’s nonfarm payrolls. Claims fell 11,000 between the April and May survey periods suggesting further job gains this month. The economy created 211,000 jobs in April after adding only 79,000 positions in March. Labor market strength and tightening could allow the Fed to raise rates at its June 13-14 policy meeting. The US central bank raised rates in March and has signalled two more rate hikes in 2017. Data such as retail sales and industrial production, which suggested economic growth picked up early in the second quarter after rising at an anaemic 0.7 percent annualised rate in the first quarter, also have supported expectations of a rate hike. But a stock market sell-off amid uncertainty over President Donald Trump’s political future could jeopardise further monetary policy tightening. Financial markets are pricing in a 60 percent chance of a 25-basis-point hike at the Fed’s June meeting, down from 78.5 percent on Tuesday, according to CME Group’s FedWatch programme. The US dollar rose against a basket of currencies after the data while US short-term interest rates futures turned lower.