New US jobless claims dropped to their lowest level since November but held above 700,000, signifying the pandemic’s lingering impact on the labour market.

First-time applications for unemployment benefits totalled a seasonally adjusted 779,000 last week, the Department of Labor said on Thursday, compared with economists’ forecast for 830,000. There were 812,000 claims during the previous week.

The federal Pandemic Unemployment Assistance programme, which provides benefits to the self-employed and others who would not qualify for regular benefits, had about 349,000 new claimants on an unadjusted basis, down from 404,000 a week earlier.

While claims have dropped for three straight weeks, it remains “too early to predict that this begins a strong reversal of excruciatingly high lay-offs”, said Robert Frick, corporate economist at Navy Federal Credit Union.

“It is clear that the resurgent pandemic is having a significant impact on economic activity and hence on jobless claims in certain sectors of the economy and regions of the country, and that is likely the main factor behind continued high readings,” said Joshua Shapiro, chief US economist at MFR, who also noted that claims data in the weeks following the holiday season are often volatile.

“With that said, we have seen significant declines in recent weeks that may indicate an easing of lay-off pressures.”

The US labour market’s rebound has sputtered in recent months, coinciding with a resurgence of coronavirus cases. The economy lost 140,000 jobs in December, primarily due to widespread lay-offs in the leisure and hospitality sectors.

President Joe Biden has floated $1.9tn in stimulus and other measures related to fighting Covid-19 in a call for additional spending on top of the $900bn package that Donald Trump signed in December. In total, lawmakers approved $3.5tn in economic relief last year.

Mr Biden’s proposal to Congress has faced opposition from Republican lawmakers wary of passing another huge bill, particularly as more states loosen business curbs and vaccinations boost optimism over the economic outlook.

A group of 10 Republican senators made a $600bn counter offer that would provide stimulus cheques at a lower level than the president’s plan. However, Democrats have pressed ahead with a budget reconciliation process that could allow them to pass the $1.9tn package without Republican votes.

The US has averaged 135,341 new confirmed infections per day over the past week, down from a peak seven-day average of almost 245,000 in mid-January, according to a Financial Times analysis of Covid Tracking Project data. More than 27m people have received at least one dose of a coronavirus vaccine so far, figures from the US Centers for Disease Control and Prevention showed.

Economists believe hiring picked back up in January, estimating that the labour department on Friday will report a gain of 50,000 jobs for the month. Payroll processor ADP said on Wednesday the private sector added 174,000 jobs in January but warned of the prolonged impact of the pandemic on companies large and small.

The jobless claims report showed that the pace of unemployment filings slowed in Illinois, Texas and Kansas, while California took in a higher number of weekly applications, based on advance figures that are not seasonally adjusted.

The number of Americans actively collecting state jobless aid hit 4.6m for the week that ended on January 23, marking a decline from 4.8m in one week. The insured unemployment rate, considered an alternative measure of joblessness, fell to 3.2 per cent from 3.4 per cent.

All state and federal programmes had a combined 17.8m people claiming benefits as of January 16, according to unadjusted figures that are reported on a two-week delay.