In an upbeat sign for the labor market ahead of tomorrow's closely watched monthly jobs report, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits unexpectedly fell to a five-year low in the week ended July 27th. The report said initial jobless claims fell to 326,000, a decrease of 19,000 from the previous week's revised figure of 345,000. The decrease surprised economists, who had expected jobless claims to edge up to 345,000 from the 343,000 originally reported for the previous week. With the unexpected decrease, initial jobless claims fell to their lowest level since hitting 321,000 in the week ended January 19, 2008. However, analysts have suggested that the jobless claims data for July should be taken with a grain of salt due to the difficulty in adjusting for the timing of annual retooling shutdowns at automakers. Sal Guatieri, Senior Economist at BMO Capital Markets, said, "Fewer shutdowns in the auto industry might have encouraged the decline, with the Labor Department citing typical July volatility." Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also fell to 2.951 million in the week ended July 20th from the preceding week's revised level of 3.003 million. The four-week moving average of continuing claims edged down to 3,026,000, a decrease of 500 from the preceding week's revised average of 3,026,500. Friday morning, the Labor Department is scheduled to release its highly anticipated report on the employment situation in the month of July. "Non-farm payrolls (due out tomorrow) are expected to increase 175,000 in July, moderating from the first-half average gain of 202,000, though likely good enough to reduce the unemployment rate to 7.5%," Guatieri said. He added, "The labor market continues to improve moderately, though not substantially as the Fed would like it to." The Labor Department said its less volatile four-week moving average dipped to 341,250, a decrease of 4,500 from the previous week's revised average of 345,750.