NEW YORK (CNNMoney.com) -- The number of Americans filing first-time claims for unemployment insurance rose modestly last week, the government said Thursday.
The figure still came in below analysts' expectations.
There were 434,000 initial jobless claims filed in the week ended Jan. 2, up 1,000 from the previous week's upwardly revised 433,000, the Labor Department said.
A consensus estimate of economists surveyed by Briefing.com expected claims to jump to 440,000.
The 4-week moving average of initial claims totaled 450,250, down 10,250 from the previous week's revised average of 460,500. The average figure has dropped more than 30% since it peaked last April.
"At a minimum, any deterioration in the labor market has diminished and the declining trend of jobless claims reinforces the possibility of a decisive return of job growth as early as the spring of 2010," said John Lonski, chief economist at Moody's Economy.com.
Continuing claims: The government said 4,802,000 people filed continuing claims in the week ended Dec. 26, the most recent data available. That's 179,000 down from the preceding week's unrevised 4,981,000 claims.
The 4-week moving average for ongoing claims fell by 95,250 to 5,005,750 from the previous week's revised 5,101,000.
Don't break out the champagne just yet. The slide may just be signaling that more filers are dropping off those rolls into extended benefits.
Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, or people whose benefits have expired.
Congress passed legislation in November to extend federally paid benefits up to 99 weeks, depending on the state, but the law only helps those who exhausted their federal unemployment lifelines by the end of last year.
Lawmakers passed measures in December to extend the filing deadline through the end of February.
Both chambers initially introduced bills to push the deadline to apply for benefits through 2010 or beyond, but Democratic leaders in the House scaled back the effort in hopes of getting the bill through the Senate more quickly.
State-by-state: Jobless claims in 12 states declined by more than 1,000 for the week ended Dec. 26, the most recent data available. Claims in California dropped the most, by 23,160, which the state attributed to a holiday-shortened week and fewer layoffs in the construction and service industries.
A total of 14 states said the claims increased by more than 1,000. Claims in Pennsylvania jumped the most, by 9,653, which the state said was due to layoffs in the construction, service, food and transportation industries.
Outlook: With layoffs slowing, Lonski expects job growth may be near.
"Fewer layoffs implies that financial conditions of businesses have improved," he said. "In time, businesses will need to hire more workers in order to fulfill customers' needs."
He added that the unemployment rate could have peaked October at 10.2%, and employers could start adding enough jobs to see positive job growth as early as March.
The unemployment rate dropped to 10% in November, according to the Labor Department, which is due to release the December report Friday. Economists surveyed by Briefing.com expect the rate to remain at 10%.
Even if the December report shows a rise in the unemployment rate, Lonski said the declining trend of jobless claims is so strong that an uptick could be reversed in January. He added that jobless claims are a leading indicator and more telling for the future of the labor market that the unemployment rate, which is a lagging indicator.
But Lonski also warned that when job growth arrives, it will be gradual.
HSBC banker arrested at JFK airport as he prepared to leave the country. He and former trader face federal charges they manipulated currency trades. More
Bernie Sanders takes credit for forcing for forcing Hillary Clinton and the entire Democratic Party to get a lot tougher on Wall Street. But how likely is that to happen? More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
Only 3% of employers offer so-called "vacation stipends" that help pay for their employees' vacations. But those that do make taking time off a must. More