Fewer than expected Americans filed new claims for unemployment benefits last week as an improving public health environment allows more segments of the economy to reopen, putting the labor market recovery back on track.

Initial claims for state unemployment benefits totaled a seasonally adjusted 712,000 for the week ended March 6, compared to 754,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 725,000 applications in the latest week.

New coronavirus infections have dropped for eight straight weeks, declining 12% last week, according to a Reuters analysis of state, county and CDC data. Vaccinations jumped to a record 2.2 million shots per day and virus-related deaths fell 18%.

That, together with nearly $900 billion in additional pandemic relief money advanced by the government in late December, fired up consumer spending and hiring in February after declining in December.

Domestic demand is expected to surge in the months ahead, after Congress approved President Joe Biden’s $1.9 trillion recovery package, which will send fresh aid to small businesses as well as one-time $1,400 checks to mostly lower- and middle-income households. It will also extend a government-funded $300 weekly unemployment supplement through Sept. 6.

Jobless claims have been slow to decline with the improvement in economic activity and public health because of issues ranging from fraudulent filings, backlogs to recent winter storms in the South.

Though claims have dropped from a record 6.867 million in March 2020 when the pandemic hit the United States just more than a year ago, they are above their 665,000 peak during the 2007-09 Great Recession and could remain elevated because of the expanded unemployment benefits. In a well functioning labor market, claims are normally in a 200,000 to 250,000 range.

“There is some risk in our view though that expanded unemployment, with benefits of an additional $300 per week, could keep the level of claims for unemployment benefits more elevated this year, as some workers could earn more on unemployment than in their previous jobs,” said Andrew Hollenhorst, an economist at Citigroup in New York.

Regular state unemployment benefits averaged about $346 per week in January. Together with the weekly $300 subsidy, they add up to $646 per week or over $15 per hour for a 40-hour week.

The federal minimum wage is $7.25 per hour, though some states have higher rates./Reuters