Initial claims numbers have remained steady so far in May, but the persistently high level of continuing claims (breaking above the 1.9 million-threshold for the second time in the past four weeks) continues to underscore the increased downside risks to the employment side of the Federal Reserve's mandate.

Initial jobless claims came in lower than expected, with the level reported in the week ending May 17 down by 2,000 from the unrevised 229,000 level reported for the prior week. The May 17 week's level is below the consensus of 230,000 in the Econoday survey of forecasters. The four-week moving average is up by 1,000 to 231,500 in the May 17 week.

Seasonal factors had expected a decline in unadjusted claims of 1,147 (-0.6 percent) from the previous week, and the actual decline was more than double down 3,635 (-1.8 percent).

No states reported noticeable increases or significant declines in unadjusted first-time claims.

Insured unemployment rose by 36,000 in the May 10 week to 1.903 million from a downwardly revised 1.867 million in the prior week and continuing claims are higher by 110,000 compared to the same week a year ago, a now ever-present reminder of the ongoing labor market softness. The four-week moving average is up by 17,500 to 1.888 million, from a revised 1.870 million in the May 3 week. The insured rate of unemployment remained at 1.2 percent in the May 10 week.

Claims are seen pretty steady at 230K from 229K 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.