Initial claims numbers declined more than expected last week (albeit one shortened by the Thanksgiving holiday) but the persistently elevated continuing claims (above 1.9 million for 28 straight weeks) will be another supportive data point for the more dovish Federal Reserve officials who favor another rate cut at this month's FOMC meeting.

Initial jobless claims came in lower than expected, with the level reported in the holiday-shortened week ending November 29 down 27,000 from the revised 218,000 level reported for the prior week (previously 215,000). The November 29 week's level compares to the consensus of 225,000 in the Econoday survey of forecasters. The four-week moving average is down 9,500 to 214,750 in the November 29 week.

Seasonal factors had expected a decrease in unadjusted claims of 21,172 (-8.6 percent) from the previous week, but instead there was a decline of 49,419 (-20.0 percent).

Only Pennsylvania (+2,130) reported a noticeable increase in unadjusted first-time claims, while California (-19,551), Florida (-2,399), Georgia (--2,114), Illinois (-2,138), New York (-3,225), Texas (-8,349) and Washington state (-3,098) reported significant declines.

Insured unemployment was at 1.939 million in the November 22 week, with the prior week's level revised down to 1.943 million from 1.960 million. Continuing claims are higher by 68,000 vs. the same week a year ago, underlining what continues to be a weak hiring pace. The four-week moving average is down 6,250 to 1.945 million, from a downwardly revised 1.951 million in the November 15 week. The insured rate of unemployment remained at 1.3 percent in the November 22 week.

Claims seen at 225K from a low 216K last week, back toward the 4-week moving average at 223.75K

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.