WASHINGTON (Reuters) -The number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting the labor market continued to chug along, though risks are mounting from tariffs.

Initial claims for state unemployment benefits dropped 13,000 to a seasonally adjusted 228,000 for the week ended May 3, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week.

The decline unwound some of the boost from school spring breaks in New York state, which had lifted claims to a two-month high. President Donald Trump's sweeping tariffs, including hiking duties on Chinese imports to 145%, have soured business and consumer sentiment, heightening economic uncertainty.

Economists say it is only a matter of time before the weakness in business and consumer surveys spills over to so-called hard data like claims, inflation and employment reports.

The Federal Reserve on Wednesday kept its benchmark overnight interest rate in the 4.25%-4.50% range, with policymakers at the U.S. central bank noting that "the risks of higher unemployment and higher inflation have risen."

Fed Chair Jerome Powell told reporters "the tariff increases announced so far have been significantly larger than anticipated," adding "if sustained, they're likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment."

Trump sees the tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base.

A reluctance by employers to let go of workers after struggling to find labor during and after the COVID-19 pandemic accounts for most of the labor market's resilience. Some companies more exposed the trade tensions have started laying off workers, though on a small scale.

An Institute for Supply Management survey last week showed manufacturing employment remained depressed in April, noting that "layoffs were the primary tools used, an indication that head-count reduction is becoming more urgent."

Rising economic uncertainty has added to companies' hesitancy to hire more workers, leaving those who lose their jobs experiencing long bouts of unemployment.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 29,000 to a seasonally adjusted 1.879 million during the week ending April 26, the claims report showed.

The unemployment rate was unchanged at 4.2% in April, but the median duration of joblessness jumped to 10.4 weeks from 9.8 weeks in March. The economy added 177,000 jobs in April.