Applications for U.S. state unemployment benefits dropped for the third week in a row, another incremental advance in the labor market’s recovery.

       Initial unemployment claims in regular state programs totaled 375,000 in the period ended Aug. 7, in line with estimates from a Bloomberg survey of economists. That’s down 12,000 from the prior week, Labor Department data showed Thursday.

       Jobless claims have been largely falling this year as a pickup in economic activity strengthens business conditions and leads to a record number of job openings. While initial claims are broadly expected to continue declining in the coming months, the spreading Covid-19 delta variant poses a risk to the pace of recovery.

       Initial claims in Michigan and New York were among the biggest declines last week. California posted the largest increase, followed by Virginia and Maryland.

       Roughly half of U.S. governors have ended pandemic unemployment benefit programs before their expiration in September, arguing the supplemental aid is making it harder for businesses to fill a record number of job openings. Lawsuits in some of those states challenging the governors’ legal authority to end the aid could restore the halted benefits until they officially expire.

       The latest jobs report showed payrolls increased by 943,000 in July, the biggest increase in nearly a year, while the unemployment rate dropped to a pandemic low of 5.4%. Still, vacancies stood at a record high in June, pointing to a mismatch between labor supply and demand.