Initial jobless claims are down 17,000 to 233,000 in the August 3 week, unwinding the increase of 15,0000 to 250,000 in the prior week. The August 3 level is below the consensus of 240,000 in the Econoday survey of forecasters. The four-week moving average is up 2,500 to 240,750 in the current week from 238,250 in the prior week. Since late June, the weekly levels have been alternating between up and down weeks. The underlying trend seems to be around 230,000-235,000 which is consistent with a healthy labor market with more balanced supply and demand.

The insured rate of unemployment remains at 1.2 percent in the July 27 week where it has been since March 2023. For workers eligible for unemployment benefits, unemployment remains very low. The level of insured unemployment is essentially unchanged in the July 27 week at up 6,000 to 1.875 million from 1.869 million in the prior week. This is not far from the four-week moving average of 1.862 million in the July 27 week which is up 7,000 from 1.855 million in the prior week. While levels are more elevated than in the year-ago week, these are also in line with a labor market able to absorb laid-off workers after relatively short periods of unemployment.

Jobless claims for the August 3 week are expected to come in at 240,000 versus a much higher-than-expected 249,000 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.