Initial jobless claims are down 13,000 to 198,000 in the week ending October 14 after a small upward revision to 211,000 in the prior week. The current week is the lowest since 192,000 in the March 11 week. The reading is below the consensus of 211,000 in the Econoday survey of forecasters. The four-week moving average is down a scant 1,000 to 205,750. New filings for unemployment benefits are exceptionally low for the past month. If the labor market is cooler in terms of job openings and hiring, businesses are avoiding laying off skilled workers wherever possible.

Insured jobless claims are up 29,000 to 1.734 million in the October 7 week, an increase that appears to be the result of a mismatch in seasonal adjustment factors. Unadjusted insured jobless claims are down 6,466 to 1.549 million in the October 7 week. The four-week moving average is up 19,000 to 1.694 million. The underlying trend for insured claims is fairly stable as unemployed workers find new jobs or time out of benefits.

The insured rate of unemployment is unchanged at 1.2 percent in the October 7 week after an upward revision of 1 tenth to the prior week. The small uptick in the rate in the past two weeks after five weeks at 1.1 percent is not materially different than the readings seen over the past year. For those eligible for unemployment benefits, the labor market remains tight.

Jobless claims for the October 15 week are expected to come in at 211,000 versus 209,000 in the prior week. Claims have moved lower in recent weeks toward historic lows.

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.