Initial claims in regular state programs fell by 97,000 to 684,000 in the week ended March 20, Labor Department data showed Thursday. On an unadjusted basis, the claims decreased by 100,412 to 656,789 last week, led by sharp drops in Illinois and Ohio. The median estimate in a Bloomberg survey had called for 730,000 initial claims.

The initial claims figures suggest that job cuts are easing as businesses reopen and vaccine eligibility expands to more Americans. It was the first time claims dipped below 700,000 since the pandemic began. At the same time, the labor market recovery still has a long way to go—weekly claims remain above the peak during the last recession.

Also, jobless claims have been volatile as the pandemic dragged on. Rising fraud and an precedented surge in the number of people filing for unemployment benefits also created backlogs and delays.

”Claims definitely have peaked and they have been coming down, so they’re on the right path,” said Jennifer Lee, senior economist at BMO Capital Markets. Until initial claims are in the 300,000 range, however, “I’m not going to get overly excited,” she said.

Continuing claims—an estimation of the number of Americans collecting ongoing benefits—dropped by 264,000 to 3.87 million in the week ended March 13.

While the recovery is progressing more quickly than expected, some sectors hit hardest by the virus remain weak, Federal Reserve Chair Jerome Powell said in remarks before Congress earlier this week.

“We welcome this progress, but will not lose sight of the millions of Americans who are still hurting, including lower-wage workers in the services sector, African Americans, Hispanics, and other minority groups that have been especially hard hit,” Powell said in prepared remarks during a House Financial Service Committee hearing Tuesday.

U.S. gross domestic product rose at a 4.3% annualized rate in the fourth quarter, the Commerce Department’s third estimate showed Thursday. Corporate profits fell 1.4% in the final three months of the year.

Digging deeper

• States with the largest declines in initial claims last week also included California, Florida, and New York; meanwhile, Virginia, Massachusetts, and Nevada reported the largest increases.

• Initial claims for Pandemic Unemployment Assistance for self-employed and gig workers decreased by about 42,500 in the week ended March 20.

• Continuing claims for Pandemic Emergency Unemployment Compensation—a program for unemployed Americans who have exhausted state benefits—rose to 5.55 million in the week ended March 6.