By Sarah Chaney 

U.S. unemployment claims fell to less than one million last week for the first time since the coronavirus pandemic hit the U.S. in March, a sign the labor-market recovery is regaining steam.

New applications for unemployment benefits dropped to seasonally adjusted 963,000 in the week ended Aug. 8, the Labor Department said Thursday. Claims are down significantly from a peak of near seven million in March, but remain at historically high levels and higher than the pre-pandemic record of 695,000.

The number of people collecting unemployment benefits through regular state programs, which cover the majority of workers, also decreased at the beginning of August. That figure, at about 15.5 million, was still well above the pre-pandemic peak of 6.6 million in 2009.

The decline in jobless claims indicates layoffs are easing and hiring is picking up, said Julia Pollak, economist at job site ZipRecruiter.

"There may now just finally be enough activity to make businesses feel confident enough to try to open their doors even though they're running at a low capacity in most cases," she said.

The drop in claims could also reflect waning fiscal support, Ms. Pollak said. The expiration of the extra $600 a week in benefits puts much less money in unemployed individuals' pockets, possibly discouraging them from applying for benefits.

President Trump signed an executive action Saturday that authorized states to extend a federally funded $300 in benefits and provide an extra $100 in state-funded benefits. States likely won't start implementing the supplemental benefits for weeks, as they must apply for the federal funds and set up new programs.

Actual claims figures -- numbers not adjusted for seasonal factors -- dropped as well, falling by 156,453 to 831,856. Economists have been watching for distortions in the seasonally adjusted figures, given the scope of shifts in economic data caused by the pandemic.

Other indicators also suggest the battered labor market is healing and likely past the worst of the crisis. Employers added 1.8 million jobs in July, the third consecutive month of hiring gains. The jobless rate fell last month to 10.2% after peaking near 15% in April.

Google searches for "find a job" rose last week, according to Google Trends.

Tara McCracken, Goodwill's director of workforce development in Northwest North Carolina, said the agency has seen greater demand for its job-search programs within the last two months.

"They want to get to work," Ms. McCracken said, noting job openings in the leisure-and-hospitality industry -- the lifeblood of Asheville, N.C.'s economy -- have been scarce, but appeared to tick up last week.

The job-market recovery is far from complete, and employment gains have yet to restore half of the jobs lost due to the coronavirus pandemic.

"The loss of jobs was very, very immediate, and many companies cut as much as they possibly could right away and further cuts are like amputations," said Ms. Pollak. "Those are cuts that speak to the long-term viability of these companies."

A Cornell University survey that showed about 31% of workers who were placed back on payrolls after an initial layoff were laid off a second time.

Fort Lauderdale, Fla., resident Zack Matthews has lost his job multiple times in recent months. Mr. Matthews was laid off from his creative director position at a telecommunications company in March.

When his unemployment benefits didn't come through, Mr. Matthews picked up a job as an overnight manager at a bar and grill in late June, but he was laid off two weeks later.

Mr. Matthews started a new job at the end of July as a production manager at a photo and video studio. His unemployment benefits arrived in two lump-sum payments at the beginning of August, four months after he had first applied for them.

"It's been quite a year," Mr. Matthews said.

Kim Mackrael contributed to this article.

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

August 13, 2020 10:22 ET (14:22 GMT)

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