Initial claims numbers saw a small increase for the second straight week but remain at a comfortably low level. However, persistently elevated continuing claims (above 1.9 million for 11 straight weeks and hitting the highest level since November 2021) supports the argument made by the Fed officials who dissented at the last FOMC meeting that the central bank needs to take action sooner to support a weakening labor market.

Initial jobless claims came just above expectations, with the level reported in the week ending August 2 up 7,000 from the revised 219,000 level (previously 218,000) reported for the prior week. The August 2 week's level compares to the consensus of 220,000 in the Econoday survey of forecasters. The four-week moving average is down 500 to 220,750 in the August 2 week.

Seasonal factors had expected a decrease in unadjusted claims of 5,036 (-2.6 percent) from the previous week, but instead there was a smaller drop of 1,198 (-0.6 percent).

No states reported a noticeable increase or significant decline in unadjusted first-time claims.

Insured unemployment was up 38,000 to 1.974 million in the July 26 week, with the prior week's level revised down to 1.936 million from 1.946 million. Continuing claims are higher by 98,000 vs. the same week a year ago, underlining the tepid pace of new hiring.

The four-week moving average is up by 5,000 to 1.952 million, from a downwardly revised 1.947 million in the July 19 week. The insured rate of unemployment remained at 1.3 percent in the July 26 week.

Claims seen at 220K, closer to the 4-week moving average, up from 218K 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.