The number of Americans filing for unemployment benefits fell for the third time in four weeks, suggesting the labor market is still gradually recovering while remaining far from its pre-pandemic health.

The progress last week was broad-based across states and California resumed reporting after a pause, offering figures that improved the overall jobs picture.

Initial jobless claims in regular state programs declined to 787,000 in the week ended Oct. 17, according to Labor Department data Thursday. Without adjustments for seasonal fluctuations, claims dropped by about 73,000.

Continuing claims -- the total pool of Americans on ongoing state unemployment benefits -- fell by 1.02 million to to 8.37 million in the week ended Oct. 10, though the number of Americans on extended unemployment benefits rose. That reflects people who exhausted regular state benefits.

Economists expected 870,000 initial state claims and 9.63 million continuing claims, according to the median estimates in a Bloomberg survey.

California reported claims fell to 158,877 on an unadjusted basis, the first updated figures from the state since it paused processing for two weeks to whittle down a massive backlog and improve fraud prevention. The new numbers put national jobless claims on a lower path than previously reported, with initial filings for the week ended Oct. 10 revised down to 842,000 from 898,000.

The figures are a welcome sign of some improvement in the labor market after a concerning jump in filings during the prior week. But a fresh surge in coronavirus infections across the country and an extended deadlock over new fiscal stimulus threaten to limit further progress in coming months.

“We are finally seeing the downtrend in initial claims, getting us at least back towards the levels seen in prior cycles,” said Michael Englund, chief economist at Action Economics LLC. At the same time, “initial claims are going to stay heightened because of increased job churn -- it’s people leaving jobs alongside another pool of people who are getting jobs.”

The decline in continuing claims coincided again with an increase in Americans on Pandemic Emergency Unemployment Compensation, a federal program that provides an additional 13 weeks of benefits. That figure rose about 510,000 to 3.3 million in the week ended Oct. 3.

U.S. stocks rose at the open on Thursday, while Treasury yields were little changed and the dollar was slightly higher.

What Bloomberg’s Economists Say

“The reported national tally has been artificially higher, but the week ended Oct. 10 still saw a hefty increase in the number of claims. The overall picture remains unchanged -- the downtrend has been stalling even though the latest decline is somewhat encouraging.”

-- Eliza Winger

Initial claims decreased in most states last week, indicating the improvement was broad-based. California had the biggest drop, followed by Florida, Georgia, New York and Michigan.

The latest figures suggest October’s jobs report will be better than previously thought, given that last week coincided with the reference period for the monthly numbers due Nov. 6.

The report follows the Federal Reserve’s Beige Book survey of corporate anecdotes on Wednesday, which showed the economy continued growing at a slight to moderate pace with employment increasing but workers still concerned about health and childcare. Fed policy makers have flagged that more fiscal stimulus is needed to boost growth.

--With assistance from Edith Moy, Chris Middleton, Sophie Caronello, Vince Golle and Ana Monteiro.