Initial jobless claims came in less than expected in the latest week, declining by 6,000 in the week ending March 29 from the revised 225,000 level (previously 224,000) reported for the prior week. The March 29 week's level compares to the consensus of 226,000 in the Econoday survey of forecasters. The four-week moving average is down by 1,250 to 223,000 in the March 29 week.

Seasonal factors had expected an increase in unadjusted claims of 5,403 (-2.7 percent) from the previous week, but they actually rose by a miniscule 157 (+0.1 percent), instead.

Kentucky was the only state with a noticeable increase in unadjusted first-time claims. No states reported significant declines.

Insured unemployment rose by 56,000 in the March 22 week to 1.903 million, from a downwardly revised 1.847 million in the prior week and continuing claims are higher by 115,000 compared to the same week a year ago, underscoring the soft hiring conditions.

The four-week moving average is up by 2,750 to 1.871 million, from a revised 1.868 million in the March 15 week. The insured rate of unemployment remained at 1.2 percent in the March 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 May 2024), should be a warning about the entrenched weakness in the labor market.

Claims have been holding surprisingly steady around 225K and are expected at 226K in the latest 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.