Initial jobless claims increased 22,000 to a higher-than-expected 231,000 level in the May 4 week, indicating some weakening in the labor market. Initial claims have not been this high since the August 26, 2023 week. The April 27 week was virtually unrevised at 209,000 from an initially reported 208,000 level.

The four-week moving average was up 4,750 to 215,000 in the May 4 week, the highest level since the week ended February 10, although it was close, at 214,500, during three consecutive weeks ended April 13.

Insured jobless claims rose 17,000 to 1.785 million in the April 27 week, following three consecutive weeks of declines totaling 42,000. The insured rate of unemployment for those eligible for benefits remained steady at 1.2 percent in the week where it has been for more than a year.

Jobless claims for the May 4 week are expected to come in at 212,000 versus 208,000 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.