The number of people filing for unemployment benefits rose dramatically last week, the Labor Department said, as the labor market continued to deteriorate and holiday seasonal workers were laid off.

According to the Labor Department, weekly initial jobless claims rose by 54,000 in the week ending Jan. 10, up to 524,000 people, on a seasonally-adjusted basis. It was the first time jobless claims rose in two weeks.

The four-week average of new claims last week fell to 518,500 from 526,500.

The increase was slightly more than the 46,000 rise economists were expecting. This week’s layoff report was the first full week for jobless claims since the holiday season.

Continuing claims, which are people on unemployment benefits for more than one week, fell by 115,000 to 4.5 million people.

Initial jobless claims, which come out every week, are considered one of more “real time” economic statistics that Wall Street gets on a regular basis. But the number can be distorted by simple things such as holidays, which keeps unemployment offices closed and means less time for state and local governments’ to get their data to the Labor Department

“There is still a lot of 'noise' affecting the initial claims data reported Thursday morning coming out of two holiday-shortened weeks and the difficulty of seasonal adjustments in a volatile labor environment,” said Mark Lieberman, FOX Business's Senior Economist. “The data this week for initial claims are probably more reflective of labor market conditions than the lower numbers in the prior two weeks.”

Philadelphia Fed Index

The Philadelphia Federal Reserve Business index rose unexpectedly in January, the regional central bank said. The Philadelphia index rose to a reading of -24.3, up from December's reading of -36.1.

Economists had expected the index to come in at a reading of -36.1. A reading below zero indicates that regional economy is contracting.