The number of Americans filing first-time claims for jobless benefits unexpectedly dipped last week while staying extremely high, with the labor market recovery appearing to stall as a raging COVID-19 pandemic threatens to overwhelm the country.

Initial claims for state unemployment benefits totaled a seasonally adjusted 787,000 for the week ended Jan. 2, compared to 790,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 800,000 applications in the latest week.

Elevated claims are in line with other data that have suggested the economy was taking a beating from business restrictions and retrenchment in consumer spending because of the pandemic. Minutes of the Federal Reserve’s Dec. 15-16 meeting published on Wednesday showed policymakers expected soaring coronavirus cases “would be particularly challenging for the labor market in coming months.”

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