WASHINGTON: The number of Americans filing new applications for unemployment benefits decreased last week, suggesting that the labor market was stabilizing as authorities started to loosen pandemic-related restrictions on businesses.

Despite the signs that layoffs are ebbing, the weekly jobless claims report from the Labor Department on Thursday showed at least 17.8 million Americans were on benefits in mid-January, indicating that long-term unemployment was likely becoming entrenched. That could boost President Joe Biden's push for the US Congress to pass his $1.9 trillion recovery plan.

Treasury Secretary Janet Yellen told ABC's Good Morning America that the massive stimulus plan was needed "to make sure people have jobs, if they don't have jobs, that they're supported."

Initial claims for state unemployment benefits fell 33,000 to a seasonally adjusted 779,000 for the week ended Jan. 30. That was the third straight weekly decline and exceeded economists' forecast for 830,000 applications.

Unadjusted claims decreased 23,525 to 816,247 last week. Economists prefer the unadjusted number because of earlier difficulties adjusting the claims data for seasonal fluctuations due to the economic shock caused by the pandemic.

"The decline in new claims in recent weeks adds to the evidence that the worst months for the labor market could very well be behind us," said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs 1.2 million people filed claims last week.

Claims remain above their 665,000 peak from during the 2007-09 Great Recession, but well below a record 6.867 million in last March when the pandemic hit the United States' shores.

Part of the elevation in claims reflects people re-applying for benefits after the government in late December renewed a $300 unemployment supplement until March 14 as part of a package worth nearly $900 billion in additional pandemic relief.

US stocks opened higher. The dollar firmed against a basket of currencies. US Treasury prices were lower.

LAYOFFS SUBSIDING

Though January was the worst month since the onset of the pandemic, the decline in economic activity leveled off in the second half of the month amid signs of a peak in the recent coronavirus wave.

Data from Homebase, a payroll scheduling and tracking company, showed its measure of employees at work flattened out over the last two weeks of January, pausing the decline observed from December into January.

Other data on Thursday from global outplacement firm Challenger, Gray & Christmas showed planned job cuts announced by US-based employers rose only 3.3% to 79,552 in January.

The claims report also showed the number of people receiving benefits after an initial week of aid dropped 193,000 to 4.592 million during the week ending Jan. 23. About 17.836 million people were on unemployment benefits on all programs in mid-January down from 18.322 million in the first week of 2021.

Last week's claims data has no bearing on Friday's closely watched employment report for January as it falls outside the survey period, which was in the middle of the month. Still, the signs of stability in other labor market measures support expectations that hiring rebounded in January after the economy shed jobs in December for the first time in eight months.

According to a Reuters poll of economists payrolls likely increased by 50,000 jobs in January after declining by 140,000 in December. Hopes that the economy created jobs last month were boosted by reports on Wednesday showing rebounds in private payrolls and services industry employment in January.

A survey this week also showed manufacturers hired more workers in January.

But some economists are bracing for a second straight month of job losses in January. The Conference Board's survey last week showed consumers' perceptions of labor market conditions deteriorated further in January.

The economy has recouped 12.5 million of the 22.2 million jobs lost in March and April. The Congressional Budget Office estimated on Monday that employment would not return to its pre-pandemic level before 2024.

In a separate report on Thursday, the Labor Department said nonfarm productivity, which measures hourly output per worker, dropped at a 4.8% annualized rate last quarter. That was the deepest pace of contraction since the second quarter of 1981. Productivity grew at a 5.1% pace in the third quarter.

Economists polled by Reuters had forecast productivity declining at a 2.8% rate in the fourth quarter. Compared to the fourth quarter of 2019, productivity increased at a 2.5% rate.