Fed Watching Labor Market
Economists said the Federal Reserve would look at the claims data favorably as it considers when to raise interest rates.
Fed Chair Janet Yellen cautioned last week that the U.S. central bank could raise rates sooner and more rapidly than currently envisioned if the labor market continued to improve faster than anticipated by policymakers.
Economists currently do not expect the U.S. central bank to start raising interest rates before the second half of 2015. The Fed, which is wrapping up its monthly bond buying program, has kept overnight lending rates near zero since December 2008.
In its report, the Labor Department said the four-week average of claims, considered a better gauge of labor market trends as it irons out week-to-week volatility, fell to the lowest level since May 2007.
The number of people still receiving benefits after an initial week hit the lowest level since June 2007 in the week ended July 12.
The so-called continuing claims data covered the week of the household survey from which the unemployment rate is calculated, and suggested the jobless rate could decline from near a six-year low of 6.1 percent.