WASHINGTON, Jan. 14 (Xinhua) -- Initial jobless claims in the United States soared to 965,000 last week, indicating severe disruption to the labor market recovery by COVID-19 spikes, the Labor Department reported Thursday.

In the week ending Jan. 9, the number of Americans filing for unemployment benefits jumped by 181,000 from the previous week's downwardly revised level of 784,000, according to a report released by the department's Bureau of Labor Statistics (BLS).

"The start of the year usually sees a surge in filings (unadjusted claims reached 1.15 million) and the timing of holidays makes seasonal adjustment particularly hard this time of year, but that cannot fully explain away the rise," Sarah House, senior economist at Wells Fargo Securities, wrote in an analysis.

"The worsening state of the pandemic is bearing down on the labor market," House said.

The latest BLS report also showed that the number of people continuing to collect regular state unemployment benefits in the week ending Jan. 2 increased by 199,000 to 5.27 million.

Meanwhile, the total number of people claiming benefits in all programs -- state and federal combined -- for the week ending Dec. 26 decreased by 744,511, but remained elevated at 18.4 million, as the country struggles to grapple with the fallout of the surging COVID-19 infections.

"Ten months into the pandemic, job instability remains tremendous," House said. "New filings relative to the number of jobs in the economy remains higher than at the peak of the Great Recession."

With the jobs recovery "stalling," the extra 300 dollars in weekly benefits provided by the recently approved 900-billion-dollar COVID-19 relief bill "could not come soon enough" for many families, she noted.

As COVID-19 shutdowns rippled through the workforce last spring, initial jobless claims spiked by 3 million to reach a record 3.3 million in the week ending March 21, 2020, and then doubled to reach a record 6.87 million in the week ending March 28.

After that, the figures have been largely declining -- though still at historically high levels -- but the trend was reversed several times amid a resurgence in COVID-19 cases, signaling a stalled recovery in the labor market.

In the week ending Aug. 8, the number of Americans filing for unemployment benefits dropped by 228,000 to 963,000, the first time it has dipped below 1 million since mid-March. Yet just in the following week, the figure rose back above the 1 million mark to reach 1.1. million.

In the week ending Oct. 17, the figure fell below 800,000 for the first time since late March, and has been largely declining in following weeks, but the trend was reversed in the weeks ending Nov. 14 and Nov. 21, and then in the weeks ending Dec. 5 and Dec. 12 amid recent COVID-19 spikes.

According to the monthly employment report released by the Labor Department last week, U.S. employers slashed 140,000 jobs in December, marking the first monthly decline in employment since April 2020.

The unemployment rate, which has been trending down over the past seven months, remained unchanged at 6.7 percent in December, the report showed.

"If we adjust the 6.7 percent headline unemployment rate for the decline in (labor) participation since February and the Bureau of Labor Statistics estimate of misclassification, the unemployment rate would be 10 percent, similar to the peak following the Global Financial Crisis," Federal Reserve board governor Lael Brainard said at a virtual event Wednesday.

Amid widespread COVID-19 shutdowns in March and April last year, 22 million Americans lost their jobs. The latest employment report showed that the number of unemployed in December remained unchanged at 10.7 million.

Brainard noted that the damage from COVID-19 is concentrated among "already challenged groups." For example, Federal Reserve staff analysis indicates that unemployment is likely above 20 percent for workers in the bottom wage quartile, while it has fallen below 5 percent for the top wage quartile.

Labor force participation for prime-age workers has declined, particularly for parents of school-aged children, where the declines have been greater for women than for men, and greater for Black and Hispanic mothers than for White mothers, said the Fed official.

According to the Fed's latest Beige Book, a majority of Federal Reserve districts reported that employment rose, although the pace was "slow," and the recovery remained "incomplete."

A growing number of districts reported a drop in employment levels relative to the previous reporting period, according to the report, which contains economic reports from 12 Federal Reserve districts, each monitored by a regional Federal Reserve Bank.

"Although the prospect of COVID-19 vaccines has bolstered business optimism for 2021 growth, this has been tempered by concern over the recent virus resurgence and the implications for near-term business conditions," the report said.