Applications remain slightly above the lowest level in two years and the four-week average of applications, a less-volatile measure, dropped last week for the eighth time in nine weeks.
The Labor Department said Thursday that applications rose by 18,000 to a seasonally adjusted 409,000 in the week ending Jan. 1. They fell to 391,000 in the previous week, the lowest point since July 2008.
Even with the gains, the number of people applying for benefits was fewer than 425,000 a threshold that signals modest job growth. And applications are far below their peak during the recession of 651,000, reached in March 2009. Still, economists say applications need to fall consistently to 375,000 or below to substantially bring down the unemployment rate.
The four-week average fell to 410,750, its lowest level since late July 2008. It has fallen by more than 76,000, or 16 percent, in the past four months. That drop has led many economists to forecast that December's jobs report, to be released Friday, will show a big increase in hiring. Employers may have added 145,000 net new jobs, analysts project, while the unemployment rate is expected to dip to 9.7 percent.
"It does look like the economy is gaining momentum, and the labor market, which has been the recovery's caboose, is starting to catch up," said Zach Pandl, an economist at Nomura Securities.
The weekly unemployment benefits figures provide a real-time snapshot of the job market. Applications reflect the level of layoffs, but can also indicate whether companies are willing to hire.
The data is usually less reliable around the winter holidays because there are large numbers of seasonal layoffs by retailers, construction companies and other employers. Bad weather can also make it harder for laid-off workers to apply for benefits.
Other recent data has signaled that economic growth is accelerating, and that hiring may follow suit. The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its index of service sector activity expanded at its fastest pace in more than five years. On Monday, the group reported that its manufacturing index rose to its highest level in seven months.
And payroll services provider ADP said Wednesday that private employers added a net total of 297,000 new jobs last month. That's the most in the ten years that ADP has tracked the data.
The number of people continuing to receive unemployment benefits fell by 47,000 to 4.1 million in the week ending Dec. 25, the department said. That doesn't include millions of long-term unemployed who are receiving extended benefits from the federal government under an emergency program set up during the recession.
Another 4.5 million people received benefits under the extended program, which offers up to 99 weeks of aid in states with high unemployment. All told, about 8.8 million people were on the benefit rolls in the week ending Dec. 18, the most recent data available.
That's down from about 8.9 million in the previous week. Some recipients likely used up all their benefits, while others may have gotten jobs.