Initial jobless claims fell 11,000 to 239,000 in the week ended August 12, roughly in line with expectations in an Econoday survey. The August 5 week level was revised up 2,000 to 250,000.

Given the two previous weeks of initial claims increases totaling 29,000, the four-week moving average still rose 2,750 to 234,250 in the August 12 week, the highest level in about a month.

Insured jobless claims rose 32,000 to 1.716 million in the week ended August 5, lifting the insured unemployment rate to 1.2 percent after three weeks at 1.1 percent.

Jobless claims for the August 12 week are expected to come in at 240,000 following a 21,000 jump to 248,000 in the prior week that unexpectedly pointed to easing demand for labor.

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.