Washington, Dec 18 (IANS): The number of initial unemployment claims in the US increased to 885,000 last week, a three-month high, as surging Covid-19 cases weigh on economic recovery, the Labour Department reported.

In the week ending December 12, the number of Americans filing for unemployment benefits increased by 23,000 from the previous week's upwardly revised level of 862,000, Xinhua news agency quoted a report issued by the Department's Bureau of Labour Statistics (BLS) as saying.

It marked the highest number of jobless claims in three months, indicating the disruption of the labour market's recovery by recent Covid-19 spikes.

In the week ending October 17, the figure dipped below 800,000 for the first time since late March, and had been largely declining in the following weeks, but the trend was reversed in the weeks ending November 14 and November 21, and then in the week ending December 5.

The BLS report also showed that the number of people continuing to collect regular state unemployment benefits in the week ending December 5 declined by 273,000 to 5.5 million.

However, the recipients of Pandemic Unemployment Assistance, a federal program that applies to workers who usually do not qualify for regular state unemployment benefits, such as the self-employed and gig workers, soared by 688,793 to 9.2 million in the week ending November 28.

Meanwhile, the recipients of Pandemic Emergency Unemployment Compensation, which provides an additional 13 weeks of benefits for those who exhaust regular state benefits, increased by 268,532 to reach 4.8 million in the week ending November 28.

Both federal programs are set to expire, while Congress remains deadlocked over a new round of Covid-19 relief.

The total number of people claiming benefits in all programs -- state and federal combined -- for the week ending November 28 rose by 1.6 million to 20.6 million, signalling a stalled recovery in the labour market.