Initial jobless claims are down 4,000 to 218,000 in the September 21 week after a 3,000 upward revision to 222,000 in the prior week. The level is well below the consensus of 225,000 in the Econoday survey of forecasters. The four-week moving average is down 3,500 to a revised 224,750 in the September 14 week. Despite some week-to-week fluctuations, the underlying trend for new filings for benefits has been coming down a bit and remains consistent with a healthy labor market with relatively normal layoff activity. Markets should find it reassuring that the job market is holding up. The latest report supports Federal Reserve's Chair Jerome Powell's reassurance that the economy and employment remain robust even as inflation is slowing.

Jobless claims appear to have settled near the 230,000-level consistent with tight labor conditions. Consensus for the September 21 week is at 224,500.

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.