The number of people claiming unemployment benefits rose during the week ending Jan. 1, according to a report by the U.S. Labor Department.
Initial jobless claims rose by 18,000 to 409,000, while the previous week's figure was revised to 391,000, the report said.
The insured unemployment rate for the week ending Dec. 25 was 3.3 percent. The week before saw the highest unemployment rates in Alaska, Puerto Rico and Idaho.
The largest increase in initial claims for the week ended Dec. 18 was seen in California, followed by Wisconsin and North Carolina.
Unemployment has been the bane of the economic recovery in the U.S. for the past several months as it hovers around 9.8 percent.
The unemployment rate for December is due on Friday, and most economists expect the rate to remain constant at 9.8 percent, while nonfarm payrolls are expected to rise by 140,000, according to economists polled by Reuters.
The ADP employment report, which is considered a preview of the official government job report, indicated that about private sector employment rose by 297,000 in December.
Economists believe that about 200,000 jobs need to be created every month for the unemployment rate to reduce. While the ADP report is comforting, most investors are awaiting the official report on Friday to understand the exact conditions in the job market.