Weekly jobless claims fall 11,000 to 239,000
Continuing claims increase 32,000 to 1.716 million
MidAtlantic factory activity rebounds in August

WASHINGTON, Aug 17 Reuters The number of Americans filing new claims for unemployment benefits fell last week, pointing to continued tightness in the labor market even as job growth slows.

Labor market tightness is underpinning the economy, with data this week showing a solid increase in retail sales in July and a surge in singlefamily homebuilding, which prompted economists to raise their growth estimates for the third quarter. But that resilience raises the risk that the Federal Reserve could hike interest rates again.

The labor markets are not imploding, said Christopher Rupkey, chief economist at FWDBONDS in New York. The economy may be heating up instead of cooling down as the monetary medicine of higher 5.5 interest rates is not slowing aggregate demand like the economics textbooks say it should.

Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 239,000 for the week ended Aug. 12, reversing half of the surge in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 240,000 claims for the latest week.

Claims shot up in the week ending Aug. 5, with applications in Ohio accounting for a big chunk of the increase.

The state, which has previously experienced fraudulent filings, attributed the jump to layoffs in the manufacturing and…