WASHINGTON -- The number of people who filed first-time claims for unemployment benefits fell unexpectedly last week to its lowest level in 17 months, the Labor Department said today.

New claims for state unemployment insurance dropped by 21,000 in the week ending July 20 to 362,000 from a revised 383,000 in the prior week, the Labor Department report stated. Some economists had expected claims would rise slightly to 382,000 from the 379,000 previously reported for the July 13 week.

The last time initial claims were lower was the week ending Feb. 17, 2001, when they stood at 355,000.

Another barometer of labor-market conditions, the number of workers already on the unemployment benefit rolls, also suggested conditions were improving. These so-called continued claims decreased 51,000 to 3,518,000 in the July 13 week -- the latest week for which figures are available -- from a revised 3,569,000 a week earlier. It was the fifth straight week continued claims had fallen.