Initial jobless claims are down 12,000 to 201,000 in the February 17 week after a negligible upward revision to 213,000 in the prior week. The reading is below the consensus of 216,000 in the Econoday survey of forecasters.

The greater-than-expected decline is mainly due to a larger decrease in unadjusted claims than accounted for in the seasonal adjustment factor. Unadjusted claims fell 26,053 to 197,932 in the February 17 week, down 11.6 percent where the seasonal factor was for a decrease of 6.0 percent. The four-week moving average fell 3,500 to 215,250 in the February 17 week. Overall, levels of applications for unemployment benefits are low and consistent with a tight labor market and moderate economic expansion.

Insured unemployment claims fell 27,000 to 1.862 million in the February 10 week after 1.889 million in the prior week. The four-week moving average was up 8,500 to 1.878 million in the February 10 week. The level of insured jobless claims for those eligible for jobless benefits are running somewhat above the year-ago week of 1.714 million. However, current levels reflect a healthy labor market able to absorb the unemployed, although not quite as quickly as the same time last year.

The insured rate of unemployment fell to 1.2 percent in the February 10 week after 1.3 percent in the prior week. For over a year, the insured rate of unemployment has hovered within a tenth of the 1.2 percent reading. Despite the potential for restrictive monetary policy to slow the US economy, indicators are not seeing much of an impact in the measures of unemployment.

Jobless claims for the February 11 week are expected to come in at 216,000 versus 212,000 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.