Confirming weakening U.S. labor market conditions, initial claims increased 27,000 to 263,000 in the week ended September 6, the highest level since October 23, 2021. The picture was weaker than expected by forecasters in an Econoday survey, which had the highest estimate at 247,000.

The four-week average was up 9,750 to 240,500, with three of the four past weeks recording increases.

Higher-than-expected initial claims for the first week of September come on the back of a disappointing 22,000 increase in nonfarm payrolls in August.

Meanwhile, continuing claims stopped their retreat in lagging data for the week ended August 30, when they were steady at an elevated 1.939 million, leaving the insured unemployment rate at 1.3 percent.

Unadjusted claims rose 7,869 (4.0 percent) in the September 6 week, while seasonal factors had expected a 13,004 (6.6 percent) drop, reinforcing the argument for a weakening labor market that could force the Federal Reserve's hand at its September 16-17 meeting.

Claims seen lower at 234K after rising by a surprising 8K to 237K in the previous week. The 4-week moving average was last at 231K.

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.