Initial jobless claims are up 21,000 to 248,000 in the week ending August 5, a sharp rise after the unrevised 227,000 in the prior week. The increase is above the consensus of 229,000 in the Econoday survey of forecasters. Unadjusted claims are up 20,023 to 225,581 in the August 5 week, significantly above what the seasonal adjustment factors anticipated. The four-week moving average is up 2,750 to 231,000 in the week. The reason behind the increase is not immediately evident, but the week's rise could easily be a one-off. However, it bears watching if the underlying trend for layoff activity is starting to pick up.

Insured jobless claims are down 8,000 to 1.684 million in in the July 29 week and point to either people timing out on benefits or leaving the unemployment rolls due to finding work. The insured rate of unemployment for workers eligible for jobless benefits remains at 1.1 percent for the third week in a row. At least through the July 29 week, the labor market is consistently tight.

Jobless claims for the August 5 week are expected to come in at 229,000 versus 227,000 in the prior week which was 6,000 higher than expected.

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.