U.S. initial jobless claims tumble to almost 42-year low

The number of Americans initially applying for unemployment aid tumbled last week to the lowest level in nearly 42 years, the latest sign of a strengthening job market, the U.S. Labor Department said Thursday.

In the week ending July 18, the advance figure of seasonally adjusted initial claims for jobless benefits fell by 26,000 to 255, 000, the lowest level since November 1973, the department said.

But economists are skeptical of such large drop, saying jobless claims in July tend to be volatile due to temporary layoffs and rehiring in the auto industry.

The four-week moving average for new claims, a more reliable measure of the underlying trend of labor market conditions, edged down by 4,000 to 278,500 last week, little changed from this spring.

Broadly speaking, weekly jobless claims have been below the key 300,000 mark since March and coincided with strong job growth at the same period, indicating sustainable and solid improvement in the labor market.

Last month, the U.S. economy added 223,000 jobs and the unemployment rate fell to a seven-year low of 5.3 percent, according to the Labor Department.

Stanley Fischer, vice chairman of the Federal Reserve, said recently that the U.S. economy is now close to full employment, and there are grounds for optimism that economic growth will be sufficient to promote further gains in labor market conditions.

The latest upbeat labor market figures might boost Fed officials' confidence to start raising interest rates later this year. The central bank has kept benchmark short-term interest rates near zero since December 2008.

Fed Chair Janet Yellen told lawmakers last week that it becomes appropriate to raise interest rates before year end as the U.S. labor market is getting closer to a "more normal state" and headwinds that are holding the economy are diminishing. Endite