Get ready for a monster July jobs report

On Thursday, the Department of Labor reported that initial claims for unemployment insurance plunged by 26,000 to 255,000, the lowest level since November 24, 1973.

That's nearly 42 years ago, or when Richard Nixon was US president, or before Greek prime minister Alexis Tsipras was born.

The important thing, however, is that this data came during the week that the Bureau of Labor Statistics conducts the survey for the monthly jobs report, which we'll get in just over two weeks on Friday, August 7.

In July, the economy added 223,000 jobs and the unemployment rate fell to 5.3%, the lowest level since April 2008. The May jobs report, which initially saw 280,000 jobs created, followed an initial claims number during the survey week - 275,000 - that was notably low.

And so not only does Thursday's number indicate a strong labor market on its own, but we could be looking at a blowout jobs number in a few weeks that could set the table, potentially, for rate hikes later this year.

Everyone from economists to the Federal Reserve is paying close attention to labor market data for clues on when the Federal Reserve will raise interest rates, with markets seemingly divided on whether the Fed will first raise rates in September or December.

Earlier this year, economists thought the Fed could move at its June meeting. However, the weak first quarter pushed back those expectations and June came and went without incident.

But with the labor market continuing to firm, the Fed's case to raise interest rates before the year runs out seems to be getting stronger.

Apart from the weekly claims numbers, it's also worth paying attention to the four-week moving average of claims, which helps to even out the week-by-week variability in the numbers.

That measure dropped 4,000 to 278,500 last week. And so the trend did not drop as sharply as the weekly print, as Pantheon Macroeconomics' Ian Shepherdson said in a note to clients, but this rolling average is near its absolute low hit a few months ago.

"What's clear from the trend, though, is that employers are holding tightly onto their staff; this is the flipside of the difficulty they report in finding qualified people," Shepherdson wrote. "In short, yet more evidence that the labor market is tightening."