According to some economists, the July decrease in unemployment
so that it was the lowest in two years suggests that the gradual improvement in the job market is continuing.
(A) so that it was the lowest in two years -> decrease in unemployment cannot be reasoned to the lowest unemployment in two years. Incorrect.
(B) so that it was the lowest two-year rate -> Same error as A. Incorrect.
(C) to what would be the lowest in two years -> would used for something didn't happen. It changed the meaning. Incorrect.
(D) to a two-year low level -> "two-year low level" is incorrect. We need the lowest. Incorrect.
(E) to the lowest level in two years -> It is better. Let's keep it.
So, I think E.