Initial claims numbers rose this week but remain at a comfortably low level. However, persistently elevated continuing claims (above 1.9 million for 13 straight weeks and again hitting the highest level since November 2021) supports the argument that the central bank needs to take action in September to support a weakening labor market.

Initial jobless claims came in higher than expected, with the level reported in the week ending August 16 up 11,000 from the unrevised 224,000 level reported for the prior week. The August 16 week's level compares to the consensus of 224,000 in the Econoday survey of forecasters. The four-week moving average is up 4,500 to 226,250 in the August 16 week.

Seasonal factors had expected a decrease in unadjusted claims of 13,875 (-7.0 percent) from the previous week, but instead there was a smaller drop of 4,470 (-2.2 percent).

Kentucky (+2,951) reported a noticeable increase in unadjusted first-time claims, no states reported significant declines.

Insured unemployment was up 30,000 to 1.972 million in the August 9 week, with the prior week's level revised down to 1.942 million from 1.953 million. Continuing claims are higher by 113,000 vs. the same week a year ago, underlining the tepid pace of new hiring.

The four-week moving average is up by 6,500 to 1.955 million, from a downwardly revised 1.948 million in the August 2 week. The insured rate of unemployment remained at 1.3 percent in the August 9 week.

Claims seen flat at 224K from 224K in the previous week. That tops the 4-week moving average last at 221.75K.

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.