U.S. unemployment lines shortened last week as the number of initial jobless claims fell to their lowest level in about 17 months, the government said Thursday.

New claims for state unemployment insurance -- a rough guide to the pace of U.S. layoffs -- fell by 28,000 in the week ended July 13 to 379,000 from a revised 407,000 in the prior week, hitting the lowest level since 355,000 in the Feb. 17, 2001 week, the Labor Department said.

Labor said volatility in the jobless claims figures at this time of year is not uncommon, with temporary plant shutdowns in the automobile, textile and apparel industries for design changes potentially skewing the data. The drop seen in the latest figures nearly erased a rise in the previous week caused by vacation shutdowns in various industries.

"This drop, like last week's unexpected rise, almost certainly reflects seasonal adjustment problems caused by the annual retooling shutdowns in the auto industry," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

The number of initial claims fell more sharply than Wall Street expectations for a drop to 396,000.

Fresh claims, overall, have been gently drifting lower for the last two months as the pace of layoffs stabilizes amid a slowly improving economy.

Over the past four weeks new claims have averaged 391,000, down from the 395,750 four-week average reported in the previous week, and the lowest in 4-1/2 months.

Economists keep a keener eye on the four-week moving average because it is considered a more reliable indicator of the job market's health.

Ian Morris, chief U.S. economist at HSBC, said despite the seasonal distortions in data released around this period, the four-week guide is a positive sign since it was continuing to "grind down" from the 400,000 level.

The number of so-called "continued claims" -- those drawing more than a week of benefits -- inched higher to 3.59 million in the week ended July 6, the latest week for which figures are available, 1,000 more than the previous week.