The prior week's sharp decline proved to be a one-week wonder. Initial claims in the latest week jumped 20,000 to more than reverse a marginally revised 16,000 drop in the July 6 week. The swings did little to move the 4-week average which edged 1,000 higher in the July 13 week to 234,750. Note that the 16,000 drop in the prior week was the largest since the September 16 week last year.

Continuing claims also rose 20,000 in lagging data for the July 6 week to lift this 4-week average by more than 10,000 to 1.851 million for the highest level since late November 2021. Nevertheless, the unemployment rate for uninsured workers remains at only 1.2 percent.

The week's rise in initial claims re-establishes a recent break above 230,000 versus a trend closer to 210,000 going back to late last year. Nevertheless, a 230,000 level still indicates a tight labor market though the shift higher does offer debating points, at least to a degree, for cutting interest rates.

Jobless claims for the July 13 week are expected to come in at 230,000 versus a much lower-than-expected 222,000 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.