Once again initial claims came in below expectations as they were down 5,000 to 227,000 in the week ended July 5, below the 238,000 consensus in an Econoday survey. This fourth consecutive decrease brought down the four-week average from 241,250 to 235,500, the lowest level since the May 24 week.

Unadjusted claims were up 10,004 to 240,802, increasing less than the 14,845 expected by seasonal factors, another indication of a more resilient than expected job market considering the amount of trade-related uncertainty.

That being said, the contrast remained with continuing claims as they increased 10,000 to 1.965 million in lagging data for the June 28 week, lifting the four-week average to 1.955 million, both reaching their highest level since November 2021. While initial claims have continuously declined since mid-June by a cumulative 23,000, continuing claims have increased by a cumulative 14,000 in less linear pattern for the four weeks through June 28. Their persistently elevated level continues to point to difficulty finding a new job while declining initial claims point to a potential slowdown in layoffs after the June employment report sent mixed signals.

The picture isn't providing any argument for the Federal Reserve to rush to cut rates at the end of this month.

Claims are expected to bounce back to 238K after an unexpected decline to 233K 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.