Filings for unemployment benefits rose last week but remained near their lowest levels since the pandemic’s onset, amid signs of a broader U.S. economic recovery.

Workers filed 719,000 initial jobless claims, on a seasonally adjusted basis, in the week ended March 27, the Labor Department said Thursday. The increase followed a downward revision to 658,000 initial claims the prior week, the lowest point since the pandemic hit in March 2020.

The four-week moving average, which smooths out the volatility in the numbers, fell to 719,000, also a low during the pandemic.

Initial jobless claims, a proxy for layoffs, remain well above pre-pandemic levels—the weekly average in 2019 was 218,000—but have trended downward since the start of the year.

The labor market has shown other signs of gaining steam, which economists expect will be captured in the Labor Department’s March employment report, which the department will release Friday. Economists forecast that the U.S. economy added 675,000 jobs last month, compared with a gain of 379,000 in February, and that the jobless rate ticked down to 6% from 6.2%.

Pandemic TrendFilings for jobless benefits reached their lowest level of the pandemic in the secondhalf of March.Source: U.S. Employment and Training Administration via St. Louis FedNote: Seasonally adjusted.
.millionRECESSIONPrevious record: 695,0002019 weekly average: 218,000July 2020'

“Higher jobless claims in the most recent week don’t detract from the strong downward trend,” said Robert Frick, corporate economist at Navy Federal Credit Union. “March jobs numbers released tomorrow will reflect this trend, and we can expect jobless claims will fall quickly in April and through the spring generally.”

Meanwhile, there were roughly 3.79 million continuing jobless claims—a proxy for the number of people receiving benefits through regular state programs—in the week ended March 20, down from 3.84 million the week before. The four-week moving average in continuing claims also fell.

Signs of an improving jobs situation come as state and local governments have eased restrictions on businesses and activity this year. Rising Covid-19 vaccinations and federal stimulus measures have helped spur a pickup in consumer spending, particularly for services such as dining, hotels, and flights.

“All of this is predicated on the trajectory of the virus,” said Constance Hunter, chief economist at KPMG. “If we can really get the virus under control, then we would expect to continue strong payrolls and at least one, if not two, really strong months of upside.”

Still, the economy has much ground to regain on its path toward recovery. There were roughly 18.2 million total continuing jobless claims—including pandemic-related unemployment programs—in the week ended March 13, on a non-seasonally adjusted basis. The U.S. economy overall still had 9.5 million fewer jobs in February than it did during the same month in 2020.

Brian Vlasak, 41 years old, said he has been out of work since March 2020, when he was furloughed from his part-time job as a theater stagehand at a Boston-area college. Mr. Vlasak said he doesn’t yet know when the work might resume, and his search for other employment has been limited because he has health concerns that put him at high risk for contracting the coronavirus.

“I’m only going to get back into the workforce as soon as I know for sure that this is under control,” Mr. Vlasak said, referring to the pandemic.

Mr. Vlasak said he has stayed afloat in part by collecting benefits through regular state and federal pandemic-related unemployment programs since last May.

Federal lawmakers provided additional jobless aid in their recent $1.9 trillion stimulus package, while also sending $1,400 cash payments to many Americans. Ms. Hunter, of KPMG, said the most recent stimulus deal, along with previous rounds of aid, positions consumers to pick up spending in coming months, which would positively affect employers.

The aid “lays the groundwork for a swifter recovery,” Ms. Hunter said.

A measure of consumer confidence in the U.S. rose in March to its highest level in a year, as optimism increased regarding current and future expectations for the labor market and business conditions. An index of small-business employment from the payroll processor Paychex and the data firm IHS Markit in March saw its largest one-month gain since 2013, with the leisure and hospitality sector showing the most improvement..

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Natasha Miller, chief executive of Entire Productions, a San Francisco-based entertainment and production company, said she is looking soon to add two to three full-time workers to her staff of six. At the start of the pandemic last year, Ms. Miller cut her workforce by half when social events dried up in the midst of state lockdown orders.

In subsequent months, Ms. Miller pivoted to hosting virtual-event productions and participated in federal-aid programs for small businesses. She said her business broke even for 2020, and that she is optimistic for a pickup in bookings as the economy more fully reopens.

“You have to hire ahead of the need,” Ms. Miller said. “The opening up and the vaccine is really opening the playground for more events and the need for more full-time people.”