Jobless claims unexpectedly fell 20,000 to 201,000 in the week ended September 16, far below Econoday's lowest forecast of 222,000. The claims level hadn't been this low since the October 22, 2022 week and the weekly decline was the largest since the end of June. The September 9 level was revised up just 1,000 to 221,000.

The four-week average came down to 217,000 from 224,750, its lowest level since the February 18 week. With claims decreasing three out of the last four weeks, the labor market is proving more resilient than expected to the Fed's efforts to cool it down. The data come a day after the central bank decided to leave its policy rate unchanged, while signaling another rate hike could materialize this year. Today's jobless claims data certainly support the argument to be less cautious in efforts to rein in inflation.

Continuing claims were down 21,000 to 1.662 million in the week ended September 9 in a third consecutive decline. This was not enough to change the unemployment rate for insured workers which has been at 1.1 percent for three weeks in a raw.

Jobless claims for the September 16 week are expected to come in at 225,000 versus 220,000 and 217,000 in the two prior weeks which marked a turn lower for this reading.

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.