Initial claims numbers remain elevated so far in May. This, combined with the persistently high level of continuing claims (above 1.9 million for the third straight week, and for the fourth time in the past seven weeks) reinforces Fed officials' concerns about the labor market weakening. However, this will not be enough to push the Fed to cut rates at today's FOMC meeting.

Initial jobless claims came in about as expected, with the level reported in the week ending June 14 down 5,000 from the revised 250,000 (previously 248,000) level reported for the prior week. The June 14 week's level is a hair above the consensus of 244,000 in the Econoday survey of forecasters. The four-week moving average is up 4,750 to 245,500 in the June 14 week.

Seasonal factors had expected a decline in unadjusted claims of 5,991 (-2.4 percent) from the previous week, but instead there was a much larger 10,160 (-4.1 percent) drop.

Only Pennsylvania (+3,773) reported a noticeable increase in unadjusted first-time claims. There were no states with a significant decline.

Insured unemployment dipped by 6,000 in the June 7 week to 1.945 million from a downwardly revised 1.951 million in the prior week but continuing claims are higher by 113,000 compared to the same week a year ago, a sign of entrenched labor market's softness. The four-week moving average is up by 13,000 to 1.926 million, from a revised 1.913 million in the May 31 week. The insured rate of unemployment remained at 1.3 percent in the June 7 week from the prior week.

Claims seen down toward the 4-week moving average (240K) at 244K versus 248K in 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.