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Unemployment claims drop, raising hopes for job market

Americans filed fewer applications for unemployment insurance in the latest week, erasing the increase in jobless claims from the previous week and providing a glimmer of hope for the struggling job market.

The Labor Department reported Thursday that seasonally adjusted claims dropped by 35,000 to 353,000. The four-week moving average, considered a better gauge of labor market conditions because it smooths out wrinkles in the data, dropped 8,750 to 367,250.

Jobless claims have been on the rise lately, boosting worries that the U.S. job market was succumbing to concerns about Europe's debt crisis and deadlock in Washington. The unemployment rate came in at 8.2 percent in June, when businesses created a tepid 80,000 new jobs.

But the jobless claims data has been volatile because this year, automakers are carrying out fewer temporary plant shutdowns, throwing off the model the department uses to smooth the data for typical seasonal patterns.

A Labor Department official said they were still experiencing volatility related to the auto layoffs that usually happen at this time of year. Otherwise, the data had few blips. Only figures for Utah were estimated.

The labor market has suffered three months of sub-100,000 job growth as the economy slowed amid a cloud of uncertainty spawned by fears of sharp contraction in fiscal policy and debt problems in Europe.

Federal Reserve Chairman Ben Bernanke told lawmakers last week that the U.S. central bank, which last month expanded its efforts to spur the economy, would take additional action if officials concluded no progress was being made towards higher levels of employment.

The number of people still receiving benefits under regular state programs after an initial week of aid fell 30,000 to 3.287 million in the week ended July 14.

Reuters contributed to this report.

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