New applications for US unemployment benefits fell slightly last week, the government said on Thursday, but the level remained high months into the coronavirus pandemic.

The Labor Department said new claims dipped to 793,000, seasonally adjusted, in the week ended February 6, a decrease of 19,000 from the previous week but nonetheless a higher level than expected.

Another 334,524 people, not seasonally adjusted, filed claims under a program for freelance workers, which brought the total new applications last week to more than 1.1 million.

"Additional fiscal stimulus and broader vaccine diffusion will eventually allow the labor market to heal," Nancy Vanden Houten of Oxford Economics said.

However she pointed to January employment data showing the economy barely adding jobs in the month and warned, "current conditions are still quite weak, and declines in new jobless claims are likely to occur only gradually in the near term."

That echoed comments from Federal Reserve Chair Jerome Powell who said Wednesday that the US economy remains "very far" from returning to a strong labor market.

And the slight decline in new claims filed last week was overwhelmed by the fact Labor Department also revised the previous week's level up by 33,000 to 812,000, meaning it was unchanged from the prior week.

New filings for US unemployment claims have dropped below the 800,000-level again
New filings for US unemployment claims have dropped below the 800,000-level again AFP / CHANDAN KHANNA

The data also showed that as of the week ended January 23, the number of people receiving aid under all programs rose by nearly 2.6 million to 20.4 million.

That came after a surge in people enrolling in the program for freelancers, and another for the long-term unemployed, after they were reactivated in a $900 billion aid package approved by Congress in December.

"An extraordinarily high number of people remain dependent on government support, indicative of ongoing strains in the labor market," Rubeela Farooqi of High Frequency Economics said.

The dip last week took claims below the 800,000 level for the first time since early January, and Ian Shepherdson of Pantheon Macroeconomics said the latest data showed the resurgence of claims that began last November has subsided.

He predicted sustained declines as Covid-19 vaccine coverage becomes widespread.

"The seasonal patterns suggest that claims likely dip only slightly over the next few weeks, but the dominant force as the spring arrives will be the fading of Covid and the reopening," he said in an analysis.