updated 1/13/2011 9:01:00 AM ET 2011-01-13T14:01:00

More Americans applied for unemployment benefits last week after retailers shed temporary holiday employees.

The Labor Department said Thursday that the number of people seeking benefits jumped by 35,000 to a seasonally adjusted 445,000 for the week ending Jan. 8. It was the highest level since late October.

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The increase comes after applications had fallen to their lowest levels in two years over the winter holidays. Applications usually rise in early January once the holiday season ends.

The department attempts to adjust the unemployment benefits figures to account for seasonal factors. But many economists consider the data in early January less reliable because of the seasonal fluctuations.

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Applications may have also increased because the previous two weeks included the Christmas and New Year's holidays, a Labor Department analyst said. That means many state unemployment offices were likely clearing backlogs of claims, he said.

Fewer than 425,000 people applying for jobless benefits is consistent with modest job growth. Applications are far below their peak of 651,000 during the recession, 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 spike pushed up the four-week average, a less-volatile measure, to 416,500. The average had fallen to a two-year low the previous week.

Unemployment applications reflect the level of layoffs, but can also indicate whether companies are willing to hire.

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The number of people on the unemployment benefit rolls fell sharply, declining by 248,000 to 3.9 million in the week ended Jan. 1. That data is one week behind the figures for benefit applications.

But that doesn't include millions more unemployed people who are receiving benefits under emergency federal programs put in place during the recession. About 4.6 million people received aid under the extended programs in the week ending Dec. 25, the latest data available. Those programs provide benefits for up to 99 weeks in states with the highest unemployment rates.

All told, about 9.2 million people received benefits that week.

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