In the week ending Aug. 1, the number of Americans filing for unemployment benefits dropped by 249,000 from an upwardly revised 1,435,000 in the prior week, the department said in a report.
Initial jobless claims peaked at a record 6.87 million in the week ending March 28 amid COVID-19 shutdowns, with figures declining for 15 weeks consecutively, before the trend was reversed in the week ending July 18 amid a resurgence in COVID-19 cases.
With the latest numbers, more than 55 million initial jobless claims have been filed over the past 20 weeks, indicating a mounting economic fallout related to the pandemic.
The report also showed that the four-week moving average, a method to iron out data volatility, decreased by 31,000 to 1.34 million.
"New layoffs and the ranks of the unemployed remain strikingly high, but today's report alleviates concern that the jobs recovery has gone into reverse," Sarah House, senior economist at Wells Fargo Securities, wrote in an analysis.
The data comes one day before the Labor Department releases its monthly jobs report, which, according to House, "looks a bit stale" in light of the more timely jobless claims numbers.
The Wells Fargo Securities Economics Group estimates payrolls will increase by 1.7 million in July, House said, while noting that "there remains a massive degree of uncertainty around estimates for payrolls tomorrow given the fast-moving and unprecedented scale of changes in the labor market in recent months."
The extra 600-U.S. dollar unemployment benefits per week for tens of millions of Americans expired last week, as Republican and Democratic lawmakers failed to reach a deal over the next COVID-19 relief bill.
The White House and congressional Democrats aim to strike a deal on the relief package by the end of this week, though the two sides remain far apart on some important issues.
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