By Lucia Mutikani

WASHINGTON (Reuters) -The number of Americans filing new claims for unemployment benefits fell to a nine-month low last week, suggesting that strong job growth persisted in October as the labor market remains tight.

The unexpected decline in initial jobless claims reported by the Labor Department on Thursday added to solid retail sales and factory production in September in suggesting sustained momentum in the economy. The stream of upbeat economic data bolstered expectations that the Federal Reserve could keep interest rates higher for longer. Financial markets continued to discount a rate hike next month because of soaring U.S. Treasury yields.

"Companies on earnings calls may warn about the outlook and risks ahead, but they are still holding on tight to their workers as good help is increasingly hard to find," said Christopher Rupkey, chief economist at FWDBONDS in New York. "The economy and labor markets are simply not slowing down and time will tell if this will reignite the inflation fires that until recently were looking contained."

Initial claims for state unemployment benefits dropped 13,000 to a seasonally adjusted 198,000 for the week ended Oct. 14, the lowest level since January. Economists polled by Reuters had forecast 212,000 claims for the latest week.

Though the labor market is gradually cooling, conditions remain tight, with claims at the very low end of their range of 194,000 to 265,000 for this year.

Unadjusted claims declined 18,561 to 181,181 last week. There were large decreases in Texas, New York, New Jersey, Georgia and California, which more than offset a notable rise in Tennessee.

So far there has been a limited impact from the United Auto Workers (UAW) strikes, which have disrupted supply chains, though claims spiked in Michigan during the week ending Oct. 7.

Ford Motor, General Motors and Chrysler-parent Stellantis have furloughed and laid off thousands of non-striking workers.

The Fed's Beige Book report on Wednesday said "labor market tightness continued to ease across the nation" in early October and implied cooling wage pressure. According to the Beige Book "several districts reported improvements in hiring and retention as candidate pools have expanded," but also noted that "most districts still reported ongoing challenges in recruiting and hiring skilled tradespeople."

The labor market is showing strength despite the U.S. central bank raising its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range since March 2022. Financial markets expect the Fed will leave rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group's FedWatch Tool, given the surge in Treasury yields.

Longer-dated bond yields have risen to multi-year highs in response to the economy's resilience. The labor market is driving consumer spending and the overall economy, ultimately keeping inflation elevated. The economy is expected to have grown in the third quarter at its fastest pace since late 2021.

The claims report covered the week during which the government surveyed business establishments for the nonfarm payrolls component of October's employment report. Claims fell between the September and October survey periods. The economy created 336,000 jobs in September, the most in eight months.

Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will shed more light on the health of the labor market in October. The so-called continuing claims increased 29,000 to a still-low 1.734 million during the week ending Oct. 7, the claims report showed.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)