Jobless claims fall to lowest level since 1973

The number of Americans seeking unemployment benefits has fallen to its lowest level since 1973.

The Labor Department reported Thursday that initial jobless claims dropped to 255,000 for the week ending July 18, setting a new low that has not been reached in over four decades. The strong report provides a solid indication that the economy, and particularly the U.S. labor force, is strengthening.

{mosads}The drop of 26,000 from the previous week was significantly larger than anticipated by economists. However, the Labor Department reportedly said the summer months can show strong volatility, as school staffing changes as the academic year approaches and auto plants rework their operations to prepare for new models.

But if the eye-popping figure is a sign of a new trend of strength in the labor market, it could have broad implications. Federal Reserve officials are preparing to raise interest rates likely later this year, and Fed Chairwoman Janet Yellen has indicated she believes there is still room for improvement in the labor market.

The four-week moving average of jobless claims, intended to smooth out week to week volatility in the numbers, was 278,500, down just 4,000 from the previous week’s moving average.