Initial jobless claims came in higher than expected in the latest week, rising by 22,000 in the holiday-impacted week ending February 22 from the revised 220,000 level (previously 219,000) reported for the prior week. The February 22 week's level compares to the consensus of 224,000 in the Econoday survey of forecasters. The four-week moving average is up 8,500 to 224,000 in the February 22 week, after 215,500 in the prior week.

Seasonal factors had expected a significant decline in unadjusted claims of 22,464 (-10 percent) from the previous week, but they fell by just 2,997 (-1.3 percent), instead.

There was a noticeable increase in unadjusted first-time claims filed in Massachusetts and Rhode Island, while there were large declines in initial claims reported by California, Kentucky, and Tennessee.

Insured unemployment decreased by 5,000 in the February 15 week to 1.862 million, from a slight downwardly revised 1.867 million in the prior week but continuing claims are 57,000 higher compared to the same week a year ago, as job availability continues to be an issue. The four-week moving average is up by 3,000 to 1.865 million, from a revised 1.862 million in the February 8 week. The insured rate of unemployment remained at 1.2 percent in the February 15 week.

Looking past the volatility of the initial claims numbers, the still-high level of continuing claims (yet to drop below 1.8 million since June 2024), underlines the increased risks to the employment aspect of the Federal Reserve's dual mandate.

Forecasters see claims up again to 224,000 after rising by 5,000 to 219,000 in the previous week.

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.