Jobless benefit applications reflect labor market improvement

Applications for jobless benefits ticked up last week but reflect an improving labor market. 

First-time claims for unemployment insurance increased 1,000 last week to a seasonally adjusted 326,000, the Labor Department said Thursday.

The four-week moving average, which better reflects the healthy of the labor market, continued its steady drops of the past few weeks, falling 3,750 to 331,500, providing further evidence that employers are laying off fewer workers. 

Still, the job market and broader economy face several hurdles before they can get clear of the recession's drags. 

While the jobless rate dropped to 6.7 percent in December, fewer people are participating in the labor market — 347,000 dropped out last month — and there is still only one job for every three applicants. 

Plus, nearly 40 percent of unemployed have been out of work for at least six months.

The economy only added 74,000 jobs in December, well below the more than 200,000 monthly average in the prior few months.

But many economists considered the figure an anomaly that will be readjusted in later reports. 

The good news is that business leaders are signaling that they are prepared to ramp up hiring after years of taking a cautious approach amid continued uncertainty over fiscal policy in Washington. 

As the labor market appears on the mend, Congress is faced with a question of whether to renew a federal jobless benefits program that expired at the end of last year and left more than 1.3 million without weekly checks. 

The unemployment rate could be further skewed and will drop in January because those workers, who have been without a job for at least six months, won't be counted as looking for work, which is a required under the federal program.

The Senate is expected to tackle the issue again next week and President Obama will call on lawmakers to find a way forward on continuing the program in his State of the Union address on Tuesday.