Initial claims numbers have risen more than expected in each of the last two weeks of May. This, combined with the persistently high level of continuing claims (breaking above 1.9 million for the third time in the past six weeks), reinforces Fed officials' concerns reported in the minutes of the May FOMC meeting of the growing risk that the labor market weakens in coming months.

Initial jobless claims came in higher than expected, with the level reported in the week ending May 31 up by 8,000 from the revised 239,000 (previously 240,000) level reported for the prior week. The May 31 week's level is above the consensus of 235,000 in the Econoday survey of forecasters. The four-week moving average is up 4,500 to 235,000 in the May 31 week.

Seasonal factors had expected a decline in unadjusted claims of 10,505 (-5.0 percent) from the previous week, but instead there was a much smaller 3,128 (-1.5 percent) drop.

Kentucky (+3,976) and Minnesota (+2,377) reported noticeable increases in unadjusted first-time claims. Michigan (-3,758) reported a significant decline.

Insured unemployment dipped by 3,000 in the May 24 week to 1.904 million from a downwardly revised 1.907 million in the prior week but continuing claims are higher by 11,000 compared to the same week a year ago, a now-constant reminder of the labor market's softness.

The four-week moving average is up by 8,000 to 1.895 million, from a revised 1.887 million in the May 17 week. The insured rate of unemployment dipped to 1.2 percent in the May 24 week from 1.3 percent reported the prior week.

Claims seen down to 235K after rising a larger than expected 14K to a high 240K 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.