Initial jobless claims increased 7,000 to 198,000 in the week ended March 25, coming in at the high end of expectations in an Econoday survey where forecasts had ranged from 190,000 to 200,000. The 4-week average is up 2,000 to 198,250.

Continuing claims increased 4,000 to 1.689 million in lagging data for the March 18 week. The unemployment rate for insured workers remained unchanged for the fourth consecutive week at a very low 1.2 percent.

So far, initial claims trends have been at odds with ongoing announcements of layoffs. However, today's increase comes after a slowdown in the pace of declines the previous week, when claims were down 1,000 after a 20,000 drop in the March 11 week. It remains to be seen whether the March 25 climb is the start of a rising trend, especially with Econoday Consensus Divergence Index, at minus 14, currently in the zone indicating a sight underperformance of the US economy relative to expectations.

Jobless claims for the March 30 week are expected to come in at 195,000 versus 191,000 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.