Initial jobless claims came in higher than expected in the latest week, rising by 5,000 in the week ending February 15 from the revised 214,000 level (previously 213,000) reported for the prior week. The February 15 week's level compares to the consensus of 215,000 in the Econoday survey of forecasters. The four-week moving average is down 1,000 to 215,250 in the February 15 week, after 216,250 in the prior week.

Seasonal factors had expected a decline in unadjusted claims of 15,416 (-6.6 percent) from the previous week, but instead they fell by 10,118 (-4.3 percent), instead.

There was a large drop-off in unadjusted first-time claims filed in California, although continuing claims also remain elevated following the devastating LA wildfires. There was a surge in initial claims in weather-impacted Kentucky, as well as Tennessee.

Insured unemployment increased by 24,000 in the February 8 week to 1.869 million, from a downwardly revised 1.845 million in the prior week and continuing claims are 82,000 higher compared to the same week a year ago, another warning of increased labor market softness. The four-week moving average is down 7,750 to 1.863 million, from a revised 1.870 million in the February 1 week. The insured rate of unemployment remained at 1.2 percent in the February 8 week.

Looking through the noise of the initial claims numbers, the elevated level of continuing claims (which have remained above 1.8 million since June 2024), underlines why the Federal Reserve continues to view the risks to its dual mandate as roughly in balance.

Claims are expected to rise to 215,000 in the latest week after falling by 7,000 to 213,000 a week earlier. The four-week moving average last week was down 1,000 at 216,000.

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.