By Geoffrey Smith
Investing.com -- The red-hot U.S. labor market showed a rare sign of cooling off on Thursday, as initial claims for jobless benefits rose by more than expected to their highest in three months.
The Labor Department said initial jobless claims hit 229,000, a rise of 27,000 from the previous week. That took the four-week moving average for initial claims to 215,000, also a three-month high.
Continuing claims, meanwhile, were flat at the historically low level of 1.306 million.
Analysts have been expecting claims to start trending up, against the backdrop of increasing warnings from companies that their profit margins are being hurt by inflationary pressures.
"Widespread anecdotal reports of increased layoffs point to a rising trend in claims over the summer, but we expect the numbers to remain low by historical standards," said Ian Shepherdson, chief economist with Pantheon Macroeconomics, in a note to clients.
He added that it may be difficult to spot a trend in claims numbers over the next few weeks, which historically tend to be clouded by temporary lay-offs for retooling automotive factories. This week's numbers, by the same token, may have been affected by the Memorial Day holiday.
Federal Reserve officials have pointed to the tightness in the labor market as one of the reasons for their accelerating the pace of interest rate increases this year, seeing a need to "take the froth off" a market where the number of vacancies far exceeds the number of unemployed. Last month's labor market report suggested however that wage pressures may be easing a little, after months of sharp increases in average hourly earnings.