WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose less than expected last week, pointing to sustained strength in the labor market despite trade tensions.

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson/File Photo

Other data on Thursday showed new orders of U.S-made goods rose for a second straight month in June, but business spending on equipment appeared to be slowing further.

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.

“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 labor markets yet.”

The United States is embroiled in tit-for-tat import tariffs with its major trade partners, including China, Canada, Mexico and the European Union, which have rattled the stock market.

The Trump administration has imposed duties on steel and aluminum imports, provoking retaliation by the trade partners. It has also slapped 25 percent tariffs on $34 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.

The Federal Reserve on Wednesday left interest rates unchanged while offering an upbeat assessment of both the labor market and economy. The U.S. central bank said “the labor market has continued to strengthen and economic activity has been rising at a strong rate.”

Many economists expect the Fed will raise rates in September for a third time this year.

The dollar firmed against a basket of currencies after the data. Prices for U.S. Treasuries rose while stocks on Wall Street were trading lower amid the escalating trade tensions.

STRONG JOB GAINS EXPECTED

The Labor Department said the four-week moving average of initial claims, considered a better measure of labor 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 labor market is viewed as being near or at full employment.

“For now, the story still looks good for the labor market, for those looking for work, and the prospects for the economy to continue to grow,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

In a separate report on Thursday, the Commerce Department said factory goods orders increased 0.7 percent, boosted by strong demand for transportation equipment, electrical equipment, appliances and components as well as computers and electronic products.

Factory orders increased by an unrevised 0.4 percent in May.

But manufacturing, which accounts for about 12 percent of the U.S. economy, could be slowing as worker shortages and import tariffs put pressure on the supply chain.

An Institute for Supply Management survey of manufacturers published on Wednesday showed a decline in production in July, with nearly all industries saying workers were scarce and that raw material prices had gone up because of tariffs on steel, aluminum and other imported products.

The Commerce Department also said June orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, rose 0.2 percent instead of increasing 0.6 percent as reported last month. Orders for these so-called core capital goods climbed 0.7 percent in May.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.7 percent in June instead of surging 1.0 percent as reported last month.

Core capital goods shipments edged up 0.1 percent in May. Business spending on equipment slowed in the second quarter.