Initial jobless claims are down 12,000 to 237,000 in the week ending July 8 after a minor revision to 249,000 in the prior week. The July 8 level is below the consensus of 249,000 in the Econoday survey of forecasters. The four-week moving average is down 6,750 to 246,750 in the week. Unadjusted new claims are up 6,928 to 258,6714 in the July 8 week, a smaller increase than anticipated by seasonal adjustment factors. The pace of new filings for benefits has eased from the uptick in the first weeks in June, and the underlying trend appears to be returning to that which was in place before the rise in June.

Insured jobless claims are up 11,000 to 1.729 million in the July 1 week, a small change from 1.718 million in the prior week. The four-week moving average is not materially different at 1.735 million in the July 1 week. Most beneficiaries are not staying on the rolls for extended periods. The insured rate of unemployment remains at 1.2 percent for the 11th straight week and is consistent with a tight labor market, at least for those eligible for benefits.

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.