U.S. jobless claims fall to fewest since pandemic began

The number of people seeking unemployment benefits fell sharply last week to 684,000 - the fewest since the pandemic erupted a year ago and a sign that the economy is improving.

Thursday's report from the U.S. Department of Labor showed jobless claims fell from 781,000 the week before.

It was the first time that weekly applications for jobless aid have fallen below 700,000 since mid-March of last year. Before the pandemic tore through the economy, applications had never topped that level.

The number of people seeking benefits under a federal program for self-employed and contract workers also dropped, to 241,000, from 284,000 a week earlier.

All told, the number of applicants fell below 1 million for the first time since the pandemic.

Economists are growing more optimistic that the pace of layoffs, which has been chronically high for a full year, is finally easing.

'While the level of claims remains elevated,” said Nancy Vanden Houten, an economist at Oxford Economics, 'we expect they will continue to recede as the recovery gains momentum.”

Still, a total of 18.9 million people are continuing to collect jobless benefits - up from 18.2 million in the previous week.

Roughly one-third of those recipients are in extended federal aid programs, which means they've been unemployed for at least six months.

Their prolonged joblessness could prove to be a long-term hindrance. Many people who have been unemployed for extended periods typically struggle to find work even as the economy regains its health.

The economy has been showing signs of emerging from the pandemic crisis with renewed vigor, with spending picking up, manufacturing strengthening and employers adding workers.

Though growth may accelerate this year, hiring often lags behind economic growth as businesses wait to see if rising demand is sustainable.

What's more, roughly 4 million Americans stopped looking for work during the pandemic and aren't counted in the unemployment rate.

Most of them will need to be rehired for the economic recovery to be fully complete.