Initial jobless claims experienced an uptick in the latest week as expected, up 3,000 in the week ending November 2 following a slight upward revision to 218,000 from 216,000 in the prior week. The November 2 week's level matched the consensus in the Econoday survey of forecasters. The four-week moving average, however, is down 9,750 to 227,250 in the November 2 week, after a revised 237,000 in the prior week.

The rise in initial claims was not a surprise this time around, with seasonal factors expecting an increase in unadjusted claims of 8,058 (or 4 percent) from the previous week.

There was a noticeable jump in first-time claims filed in California, Michigan, and Ohio, while Florida and Georgia saw the largest declines.

Insured unemployment is up 39,000 in the October 26 week to 1.892 million, after a downwardly revised 1.853 million in the prior week a sign of persistent softness in the labor market. The four-week moving average is up 8,500 to 1.875 million, after an upwardly revised 1.867 million in the October 19 week. The insured rate of unemployment remains steady at 1.2 percent in the October 26 week and has seen almost no variation since March 2023.

The initial jobless claims data continues to be volatile but the elevated number of those who continue to receive unemployment benefits underscores the difficulty in finding new employment. This data point will buttress the Federal Open Market Committee's widely-expected decision to cut its target interest rate by another 25 basis points when its two-day meeting concludes today.

Forecasters see weekly claims moving back to 221,000 after a surprising dip to 216,000 in the previous week. The numbers have been noisy owing to strike and weather effects.

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.