Initial jobless claims proved more favorable than expected, falling 8,000 in February 10 week to 212,000 after falling a revised 7,000 in the prior week. Nevertheless the four-week average, reflecting the rolling off of a multi-year low at 189,000 in the January 13 week, rose nearly 6,000 to 218,500 which is the highest level for this reading since early December.

Continuing claims in lagging data for the February 3 week rose 30,000 to 1.895 million which is the highest level since mid-November. The unemployment rate for insured workers edged 1 tenth higher to 1.3 percent; this reading has been edging back and forth from 1.2 to 1.3 percent for the past several months.

Today's results will probably have forecasters, at least for now, looking for another solid employment report for February. The results help offset what was a disappointing retail sales report also released at 8:30 ET this morning and leave the Relative Performance Index at plus 16 to indicate that recent US data, on net, are coming in modestly above expectations.

Jobless claims for the February 8 week are expected to come in at 219,000 versus 218,000 in the prior week.

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.