Initial jobless claims are down a scant 1,000 to 205,000 in the January 7 week after a small upward revision to 206,000 in the prior week. The level is below the consensus of 215,000 in an Econoday survey. The four-week moving average is down 1,750 to 212,500 in the January 7 week, pointing to some downward trajectory for new claims. Unadjusted claims rose 60,799 to 339,286 in the week. However, the week-over-week change was in line with the seasonal adjustment factors that anticipated a rise in claims (layoffs for temporary holiday workers). Filings for benefits remain low and consistent with businesses holding on to workers while labor supply is limited.

The level of insured unemployment benefits is down 63,000 to 1.635 million in the December 31 week, an indication that previously laid off workers are finding new jobs. The four-week moving average for insured claims is down 8,750 to 1.680 million. While the number of people receiving benefits is above levels earlier in 2022, the present level is consistent with a solid labor market, at least for workers eligible for unemployment benefits. The insured rate of unemployment dips a tenth to 1.1 percent in the December 31 week after five weeks a 1.2 percent.

Jobless claims for the January 7 week are expected to come in at 215,000 versus 204,000 in the prior week.

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.