New claims for US jobless benefits inched down last week, but not by much, as a brief outburst of optimism about a new government aid package fizzled Thursday amid a continued impasse in Washington.

New filings for unemployment assistance last week fell to 860,000, the Labor Department said Thursday, but despite the decline applications were higher than expected.

A surge in workers filed for benefits amid the widespread business shutdowns in March at the start of the Covid-19 pandemic, and though that wave is well past its peak, weekly filings remain far above the worst of the 2008-2010 global financial crisis.

And nearly 29.8 million people continued to receive some form of government aid through the week ended August 29, the latest for which data was available, the Labor Department said, and analysts have grown increasingly concerned of a spiraling employment crisis.

"While it is good the numbers are falling, their decline is tapering, so we have over a year to get to normal," chief economist at the AFL-CIO trade union federation William Spriggs said on Twitter.

The drop in people receiving unemployment benefits in the US could indicate rehiring, or it could be a sign of people being out of work for so long their benefits have run out The drop in people receiving unemployment benefits in the US could indicate rehiring, or it could be a sign of people being out of work for so long their benefits have run out Photo: AFP / Johannes EISELE

The data comes amid a continued impasse in Washington over providing additional support to the battered US economy and help for workers who have lost their jobs.

The $2.2 trillion CARES Act passed in March allowed people to receive benefits for an extended period, however, the extra $600 in weekly unemployment payments as well as a program to support small businesses have expired.

Democratic House speaker Nancy Pelosi on Thursday repeated her pledge to continue discussions with the White House on a new spending package, but said Republicans are unwilling to compromise on the size.

Democratic US House Speaker Nancy Pelosi said Republicans are unwilling to compromise to provide more aid to the hurting American economy Democratic US House Speaker Nancy Pelosi said Republicans are unwilling to compromise to provide more aid to the hurting American economy Photo: AFP / NICHOLAS KAMM

"We have a massive problem in our country," she told reporters, adding "it's hard to see how we can go any lower when you only have a greater needs."

President Donald Trump has balked at calls to ramp up support to struggling state and local governments.

White House Chief of Staff Mark Meadows threw cold water on hopes of ending the gridlock, saying on Thursday he was "not optimistic" that Pelosi would want to have "meaningful" conversation if dialogue resumes.

Economists warn that the better-than-expected economic recovery so far, which has seen the housing market remain strong, could evaporate without more stimulus.

"Failure on the part of policymakers to enact another fiscal relief package poses significant downside risks to the economy and labor market as the recovery appears to be losing momentum," said Nancy Vanden Houten of Oxford Economics.

The US is home to the world's worst coronavirus outbreak but has shown signs of recovering from the economic hit caused by the lockdowns. The unemployment rate skyrocketed to 14.7 percent in April but has since dialed back to 8.4 percent.

The latest data showed signs of improvement as the insured unemployment rate among people eligible for benefits fell 0.7 points to 8.6 percent in the week ended September 12. And the number of people receiving Pandemic Unemployment Assistance (PUA), the program for those not normally eligible for benefits, declined by more than 200,000.

Rubeela Farooqi of High Frequency Economics warned the decline in the insured unemployment rate could reflect people either being rehired, or exhausting their benefits.

"The risk going forward continues to come from virus outbreaks and intermittent interruptions to activity," she wrote in an analysis. "Overall, the labor market is less weak compared to April but remains at risk of permanent damage from repeated closures."