Jobless claims were little changed in the week ended September 23, when they edged 2,000 higher to 204,000, below the lowest forecast of 205,000 and the consensus of 211,000 in an Econoday survey.

The four-week average continued to decline, reaching 211,000, the lowest level since the February 11, 2023 week. Claims have been decreasing five of the past seven weeks, for a net decline of 46,000. Increases in the September 4 and 16 weeks totaled just 6,000. Overall, the picture continues to point to a job market that is proving more resilient than the Fed might be comfortable with.

Continuing claims rose 12,000 to 1.670 million in the week ended September 16. However, the unemployment rate for insured workers remained at 1.1 percent for the fourth consecutive week.

Jobless claims for the September 23 week are expected to rise 10,000 to 211,000 versus 201,000 in the prior week. Claims have been moving noticeably lower in recent weeks.

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.