The number of US workers filing applications for unemployment benefits continues to trend downward, with another sharp drop last week, according to government data released Thursday.

While the early end of special federal pandemic benefits in many states was expected to impact the data, applications for that type of aid actually rose in the week ended August 7, the Labor Department said.

Initial jobless claims fell by 12,000 last week to 375,000 seasonally adjusted, the third consecutive week of declines, according to the report.

The reopening of the world's largest economy amid widespread Covid-19 vaccinations has led to strong job growth and a steady downward trend in the need for unemployment aid since May.

But economists fear the explosion of infections caused by the Delta variant could lead to more business shutdowns and job losses.

As businesses reopen fewer US workers need unemployment benefits, but economist worry the spread of the Delta variant could derail the recovery As businesses reopen fewer US workers need unemployment benefits, but economist worry the spread of the Delta variant could derail the recovery Photo: AFP / Frederic J. BROWN

 

The federal government expanded unemployment benefits during the pandemic, but some states have ended those programs early, arguing that they kept jobless people from returning to work.

But the latest week saw applications for pandemic unemployment assistance meant for freelance workers not usually eligible for state benefits rose by 10,000, without seasonal adjustment, the report said.

Through the week ended July 24, the number of people receiving all types of jobless benefits plunged by more than 919,000 to just over 12 million, compared to nearly 29 million a year earlier, the report said.

"The course of the coronavirus Delta variant will weigh on how quickly labor supply recovers to meet record labor demand," said Nancy Vanden Houten of Oxford Economics.

But "assuming there are no widespread lockdown measures, we expect the economy to add more than 7 (million) jobs this year," she said in an analysis.