Initial claims came in below expectations for the fourth consecutive week, as they were down 7,000 to 221,000 in the week ended July 12, below even the lowest estimate of 230,000 in an Econoday survey. This fifth consecutive decline, which brought claims to their lowest level since the week ended April 12, points to a relative resilience of the labor market considering the amount of uncertainty related to tariffs.

Claims have decreased by a cumulative 29,000 over the past five weeks and have been below expectations for the last four weeks by an average 9,750 before revisions.

The four-week average declined 6,250 to 229,500 in the July 12 week, its lowest level since early May.

Once again, unadjusted claims increased less than seasonal factors had expected, another signal of the resilience of the job market: 19,539 versus 28,261 in the July 12 week.

The highest unadjusted increases in initial claims for the July 5 week were in Michigan and Tennessee, and the largest decline in New Jersey.

July 12 is included in the reference week for the monthly employment report. The latest Beige Book report released Wednesday, based on information collected on or before July 7, points to a very slight increase in employment, with businesses adopting a cautious stance. The survey is consistent with the jobless claims report that shows some resilience in initial claims while persistenmtly elevated continuing claims indicate difficulty in finding a new job.

Continuing claims were little changed at 1.956 million in lagging data for the week ended July 5, up 2,000, erasing the previous week's decline.

Claims are projected at 233K in the latest week after declining more than expected to 5K to 227K 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.