The number of first-time unemployment claims dropped last week after posting increases for the previous three weeks in a positive sign for the U.S. economy. 

In the Department of Labor’s report released Thursday, the number of initial jobless claims was 326,000, below the Dow Jones estimate of 345,000.

This report brought to an end the rise in unemployment claims that followed the end of enhanced federal government unemployment benefits on Labor Day, which indicates the labor market is adjusting to the shift.

The previous reports for initial claims showed the number had reached 362,000 for the week ending Sept. 25. Then they were marked up to 364,000 at the end of the month -- the highest number since Aug. 21. 

Rising numbers of initial unemployment claims from California, the nation’s most populous state, drove up last week’s update. The Golden State still posted the highest number of new claims at 68,208, down 10,513 from the previous week. 

In terms of continuing claims, which accounts for numbers up to the week of Sept. 18, the number of Americans claiming continued unemployment insurance dropped 97,000 to 2.71 million. The four-week moving average for continuing claims was 2,765,000, the lowest level for this average since March 21, 2020, when it was 2,071,750.

A total of 4,172,943 Americans are still claiming some form of unemployment benefits, down from the slightly over 5 million who were receiving any the week before. At the same time last year, over 24.6 million people were receiving unemployment benefits. 

This week’s numbers form a backdrop to Friday’s release of the Labor Department’s nonfarm payrolls report for September. August’s report came as a shock when it showed only 235,000 new jobs were added to the economy in a setback for the ongoing recovery.