Initial jobless claims came in higher than expected in the latest week, up by 14,000 in the week ending January 11 from the revised 203,000 level reported for the prior week (previously 201,000). The January 11 week's level compares to the consensus of 212,000 in the Econoday survey of forecasters. The four-week moving average is down 750 to 212,750 in the January 11 week, after 213,500 in the prior week.

The uptick in claims comes after depressed activity in the holiday-impacted week to start the year. Seasonal factors had expected an increase in unadjusted claims of 22,498 (+7.3 percent) from the previous week, and the actual rise was more than double, +45,228 or +14.7 percent.

There was a noticeable jump in first-time claims filed in California, Illinois, Kentucky, Michigan, Missouri, Ohio, and Texas. There was a major decline in applications filed in New York, Oregon, Washington, and Wisconsin.

Insured unemployment decreased by 18,000 in the January 4 week to 1.859 million, from an upwardly revised 1.877 million in the prior week but continuing claims are now 131,000 higher compared to the same week a year ago, a continuous reminder of the pockets of softness in the labor market. The four-week moving average is down 1,250 to 1.867 million, from an upwardly revised 1.868 million in the December 28 week. The insured rate of unemployment remained at 1.2 percent in the January 4 week, continuing the trend seen for most of 2024.

Looking past the constant volatility in the initial claims numbers, the continuing claims data again shows a lukewarm labor market in which many Americans are staying unemployed for longer as the difficulty in finding new employment continues.

Claims are expected to bounce back to 212,000 in the latest week after surprising to the downside at 201,000 last week, a figure presumably depressed by the holidays.

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.