WASHINGTON - January 6, 2011 - More people applied for unemployment benefits last week, one week after applications fell to their lowest level in more than two years.

The Labor Department says applications rose by 18,000 to a seasonally adjusted 409,000 in the week ending January 1. Applications fell to 391,000 in the previous week, the lowest point since July 2008.

Fewer than 425,000 people seeking unemployment benefits signals modest job growth. But economists say applications need to fall consistently to 375,000 or below to substantially bring down the unemployment rate. Applications for unemployment benefits peaked during the Depression at 651,000 in March 2009.

Last week's increase isn't enough to reverse the downward trend. The four-week average, a less-volatile measure, fell to 410,750, its lowest level since late July 2008.