Initial claims came in roughly in line with expectations in the week ended December 13, when they fell 13,000 to 224,000 after surging 45,000 the previous week. The four-week moving average was little changed at 217,500, up from 217,000 in the December 6 week.

In lagging data for the December 6 week, insured unemployment rebounded 67,000 to 1.897 million after falling 107,000 the previous week. The four-week moving average was down to 1.902 million from 1.916 million. The insured rate of unemployment remained at 1.2 percent.

Seasonal factors had expected a decrease in unadjusted claims of 44,785, or 14.2 percent in the December 13 employment survey week, but unadjusted claims were down 59,903 or 19.0 percent.

Illinois reported the largest decrease (minus 7,132), followed by New York (minus 5,513), and Pennsylvania (minus 5,215). The largest increase was 461 in Rhode Island.

Claims are expected to retreat to 225K after surging to 236K last week from 192K a week before. The report has been volatile as the data series struggles to account for holidays like Thanksgiving. Claims suggest stability with the four-week moving average at 216.75K, not a troubling figure.

New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smooths out weekly volatility.

Jobless claims are an easy way to gauge the strength of the job market. The fewer people filing for unemployment benefits, the more have jobs, and that tells investors a great deal about the economy. Nearly every job comes with an income that gives a household spending power. Spending greases the wheels of the economy and keeps it growing, so a stronger job market generates a healthier economy.

There's a downside to it, though. Unemployment claims, and therefore the number of job seekers, can fall to such a low level that businesses have a tough time finding new workers. They might have to pay overtime wages to current staff, use higher wages to lure people from other jobs, and in general spend more on labor costs because of a shortage of workers. This leads to wage inflation, which is bad news for the stock and bond markets. Federal Reserve officials are always on the look-out for inflationary pressures.

By tracking the number of jobless claims, investors can gain a sense of how tight, or how loose, the job market is. If wage inflation looks threatening, it's a good bet that interest rates will rise, bond and stock prices will fall, and the only investors in a good mood will be the ones who tracked jobless claims and adjusted their portfolios to anticipate these events.

Just remember, the lower the number of unemployment claims, the stronger the job market, and vice versa.