Initial jobless claims are down 19,000 in the week ending October 12 after an upward revision to 260,000 from 258,000 in the prior week. The October 12 level is below the 260,000 consensus in the Econoday survey of forecasters. The four-week moving average is up 4,750 to 236,250 in the October 12 week, after a revised 231,500 in the prior week.

The fall in claims was unexpected, with many analysts expecting another surge in filings due to Hurricane Helene and to a lesser extent from the ongoing strike activity at Boeing. There was a noticeable drop in first-time claims filed in Michigan, Florida, Ohio, and North Carolina.

Insured unemployment is up 9,000 in the October 5 post-hurricane Helene week to 1.867 million after 1.858 million in the prior week. The four-week moving average is up 11,500 to 1.843 million after 1.831 million in the September 28 week. The insured rate of unemployment remains steady at 1.2 percent in the October 5 week and has seen almost no variation since March 2023.

The jobless claims data are likely in for stretch of volatility, and the data for the October 19 week will likely be impact by the Oct. 14 federal holiday muddying the waters as the Federal Reserve tries to accurately gauge underlying developments in the labor market.

Claims are expected to go even higher to 260,000 after their unexpected jump to 258,000 last week. BLS said Hurricane Helene and strike activity skewed last week's number higher but markets are on high alert for other signs of fragility in the labor market.

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.