Applications for U.S. state unemployment insurance fell last week to a fresh pandemic low, indicating that dismissals are easing as business conditions improve and firms look to increase headcounts.

Initial claims in regular state programs decreased by 26,000 to 360,000 in the week ended July 10, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 350,000 initial applications.

The drop in new unemployment claims is in line with a broader economic recovery in the U.S., with businesses back to full capacity and demand for travel and leisure surging.

Even so, initial claims remain above pre-pandemic levels and employers continue to point out trouble with finding qualified workers, which could be holding back the pace of the labor market recovery.

“Conditions in the labor market have continued to improve, but there is still a long way to go,” Federal Reserve Chair Jerome Powell told the House Financial Services Committee Wednesday. “Job gains should be strong in coming months as public-health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down diminish.”