The data from the Labor Department revealed the number of applications for unemployment benefits fell more than expected last week, continuing to point to a tightening labor market.

According to the report, the initial claims for unemployment benefits declined by 5,000 to a seasonally adjusted 240,000 for the week ended July 29. Economists had expected 242,000 new claims last week.

Claims for the prior week were revised upwardly to 245,000 from the initial estimate of 244,000.

Meanwhile, the four-week moving average of claims fell by 2,500 to 241,750 last week. That was the 126th straight week that claims remained below the 300,000 threshold, the longest streak since 1970.

Economists believe that labor market tightness could encourage the Fed to announce a plan to start shrinking its huge balance sheet in September.