Initial jobless claims declined in the latest week, down 4,000 in the week ending November 9 following no revision to the 221,000-level reported for the prior week. The November 9 week's level is below the consensus of 225,000 in the Econoday survey of forecasters. The four-week moving average is down 6,250 to 221,000 in the November 9 week, after an unrevised 227,250 in the prior week.

The volatility in the initial claims data continues, making it an unreliable gauge of the labor market's current health. Seasonal factors had expected a large rise in unadjusted claims of 20,788 (almost 10 percent) from the previous week.

There was a noticeable jump in first-time claims filed in California, Minnesota, New Jersey and New York, while Michigan saw the largest decline.

Insured unemployment is down 11,000 in the November 2 week to 1.87 million, after a downwardly revised 1.884 million in the prior week but continuing claims are up 66,000 from the same week a year ago, a sign of softness in the labor market. The four-week moving average is up 1,000 to 1.875 million, after an downwardly revised 1.874 million in the October 26 week.

The insured rate of unemployment remains steady at 1.2 percent in the November 2 week and has seen almost no variation since March 2023.

The up-and-down nature of recent initial jobless claims data has reduced its reliability as a labor market indicator, but the elevated number of those who continue to receive unemployment benefits compared to a year ago underscores the difficulty in finding new employment. This data point will be supportive of the Federal Open Market Committee's expected decision to cut rates again in December.

Claims are expected to edge up to 225,000 from 221,000 last week, suggesting no big change in labor market conditions and not far off last week's four-week moving average of 227,250.

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.