WASHINGTON (Reuters) -The number of Americans filing new applications for unemployment benefits last week increased for a second straight week, pointing to softening labor market conditions amid mounting economic headwinds from tariffs.

Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 247,000 for the week ended May 31, the Labor Department said on Thursday. Economists polled by Reuters had forecast 235,000 claims for the latest week.

Companies are generally hoarding workers after struggling to find labor during and after the COVID-19 pandemic, but mounting uncertainty because of President Donald Trump’s tariffs is forcing some to layoff workers.

Federal Reserve Reports Widespread Hiring Uncertainty

The Federal Reserve’s Beige Book report on Wednesday showed “comments about uncertainty delaying hiring were widespread,” noting that “all districts described lower labor demand, citing declining hours worked and overtime, hiring pauses and staff reduction plans. It said while some districts reported layoffs in certain sectors, “these layoffs were not pervasive.”

An Institute for Supply Management survey also made similar observations, reporting steady employment in the services sector in May, but also pointing out that “higher scrutiny is being placed on all jobs that need to be filled.”

Claims Expected to Break Above Recent Range

Economists expect claims this month will break above their 205,000-243,000 range for 2025, mostly driven by difficulties adjusting the data for seasonal fluctuations and following a similar pattern in recent years.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, slipped 3,000 to a seasonally adjusted 1.904 million during the week ending May 24, the claims report showed. The elevation in the so-called continuing claims aligns with consumers’ ebbing confidence in the labor market.

Job Cuts Rise Despite Monthly Decline

A separate report from global outplacement firm Challenger, Gray and Christmas showed U.S-based employers announced 93,816 job cuts in May, down 12% from April. Layoffs were, however, 47% higher from a year ago.

The claims data have no bearing on the Labor Department’s closely watched employment report for May, scheduled to be released on Friday, as it falls outside the survey period.

Nonfarm payrolls likely increased by 130,000 jobs last month after advancing by 177,000 in April, a Reuters survey of economists showed. The unemployment rate is forecast being unchanged at 4.2%.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)