The number of new applications for unemployment benefits rose to 228,000 last week, the Labor Department reported Thursday.

Rising jobless claims, a proxy for layoffs, are a sign the unusually strong labor market might be starting to react to the Federal Reserve’s efforts to tighten monetary policy to slow economywide spending and bring down inflation. They also come as the banking system faces upheaval following the collapse of Silicon Valley Bank.

The new numbers come a day before the much-anticipated March jobs report is released by the Bureau of Labor Statistics.

This week saw some signs that the labor market is finally beginning to soften in response to the barrage of rate revisions, the most recent of which being a quarter of a percentage point increase in the Fed's target rate last month.

JOB OPENINGS FALL BELOW 10 MILLION FOR FIRST TIME IN NEARLY TWO YEARS

There were about 9.9 million job openings across all sectors in February, according to the Bureau of Labor Statistics Job Openings and Labor Turnover Survey updated Tuesday, the first time in nearly two years the number of openings fell below 10 million.

In foreshadowing before Friday’s employment report, ADP announced on Wednesday that private-sector hiring decelerated last month. Payrolls rose by only 145,000 for the month, down from 261,000 in February. That number was well below expectations.

The downward trend of job openings as well as the new numbers from ADP means that the Fed is less likely to raise rates again in May.

In fact, after the JOLTS report and ADP report, investors assigned a 56% chance that the Fed will pause rate hikes, according to CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed.

“Slower employment growth in the ADP report reinforces the signal from the big drop in job openings reported yesterday. The labor market is getting less tight. This is one of the Fed’s conditions for pausing its interest rate hiking campaign, but the Fed also wants to see core inflation slow more,” said Bill Adams, chief economist for Comerica Bank.

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“If next week’s inflation reports come in hotter than expected, the Fed might still hike their policy rate a quarter percentage point at their next decision in May,” he added.

The Fed’s next meeting is set for early May.