Initial jobless claims came in less than expected in the latest week, falling by 21,000 in the week ending March 1 from the unrevised 242,000 level reported for the prior week. The March 1 week's level compares to the consensus of 244,000 in the Econoday survey of forecasters. The four-week moving average is up by 250 to 224,250 in the March 1 week, after 224,000 in the prior week.

Seasonal factors had expected a significant jump in unadjusted claims of 25,158 (+11.4 percent) from the previous week, but they rose by just 3,833 (+1.7 percent), instead.
There was a massive spike in unadjusted first-time claims filed in New York (doubling the number filed in the prior week), while there were large declines in initial claims reported by Massachusetts and Rhode Island.

Insured unemployment increased by 42,000 in the February 22 week to 1.897 million, from a downwardly revised 1.855 million in the prior week and continuing claims are 103,000 higher compared to the same week a year ago, underscoring what appears to be entrenched labor market softness. The four-week moving average is up by 2,750 to 1.866 million, from a revised 1.863 million in the February 15 week. The insured rate of unemployment remained at 1.2 percent in the February 22 week.

Looking past the constant volatility of the initial claims numbers, the elevated level of continuing claims (yet to drop below 1.8 million since June 2024), underlines the steady rise in risks to the employment aspect of the Federal Reserve's dual mandate.

Claims are expected to rise to 244K in the latest week after surging by 22K to 242K last 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.