Another 787,000 Americans applied for unemployment benefits last week, down 19,000 from the week before and the lowest figure since November.

The data represented the second consecutive drop in the number of initial jobless claims after the figure reached a three-month high earlier this month. Still, the rate remains four times above its pre-pandemic level.

Some economists warned that the true number of Americans put out of work last week could be higher, as the Christmas holiday may have led some to wait to apply for benefits. Claims numbers also dipped in the week of the Thanksgiving holiday only to rise the week after.

The number of initial claims last week was expected to rise to 833,000.

“The good news is that numbers are not rising, but we’re stuck at a very high level of initial claims and continuing claims suggesting that the economy is still struggling to gain any kind of traction,” said Moody’s Analytics chief economist Mark Zandi. “This is consistent with an economy that is on the edge of recession and is not going anywhere fast.”

Column chart of Initial claims, millions showing Jobless claims were below 800,000 last week for first time in a month

Even with the unexpected drop in the number of initial claims for the week ending December 26, the job market is unlikely to see any lasting improvement until Covid-19 case numbers fall from their winter surge, said AnnElizabeth Konkel, economist at Indeed Hiring Lab.

“All of this economic chaos and all this discussion about the stimulus bill, at the heart of it are the questions that remain about the path of the virus,” Ms Konkel said. “The stimulus bill was certainly much needed, but it is not an instant fix to the situation. We need to get cases down.”

A $900bn relief package signed by President Donald Trump at the weekend extended jobless benefits and provided funds for businesses and efforts to tackle the pandemic, which will boost the job market but take time to feed through to the economy. The stimulus scheme adds $300 per week to existing unemployment benefits and renews two federal programmes that cover an estimated 10m Americans including the self-employed and gig workers.

Economists fear that an expected surge in Covid-19 cases following Christmas celebrations could prompt further business closures and push more Americans out of work, but still hope that any bump in case numbers could be temporarily counteracted by a boost in consumer spending following the distribution of stimulus cheques.

On top of the new claimants, 5.2m Americans are receiving unemployment benefits, down from 5.3m the week before. Mr Zandi attributed the drop to claimants exhausting their benefits as opposed to finding new jobs.

“While the job market prospects for 2021 are brighter, it will take the first half of the year for that momentum to build,” said Greg McBride, chief financial analyst at Bankrate. “Elevated unemployment will be with us long after the virus is vanquished.”