WASHINGTON • The number of Americans filing new claims for unemployment benefits fell more than expected last week as the labor market remains tight amid strong demand for workers despite rising interest rates and tightening financial conditions.

But the outlook for the economy is uncertain, with other data Thursday showing corporate profits falling across the board in the first quarter. Some economists believe the erosion of profits and falling share prices could force companies to pause hiring or start laying off workers.

Several retailers, including Walmart, have lowered their full-year earnings forecasts, citing high inflation. Snap, the parent of Snapchat issued a profit warning this week, sparking a sell-off of social media stocks.

“The biggest expense for most companies is labor always,” said Christopher Rupkey, chief economist at Fwdbonds in New York.

“High-flying tech companies have seen their share prices plummet which will force management to tighten their belts.”

Initial claims for state unemployment benefits decreased 8,000 to a seasonally adjusted 210,000 for the week ended May 21, the Labor Department said. The decline partially unwound some of the prior week’s surge, which had pushed claims to their highest level since January.

There was a plunge in applications of 5,316 in California. Claims also dropped by 4,059 in Illinois and 3,564 in Kentucky.

Economists polled by Reuters had forecast 215,000 applications for the latest week. The number of people receiving benefits after an initial week of aid increased 31,000 to 1.346 million during the week ending May 14.

Some economists blamed the recent increase in applications to less generous seasonal factors, the model that the government uses to strip out seasonal fluctuations from the data, in May relative to the previous two months.

Others, however, believed some retailers were laying off workers. High inflation, with annual consumer prices increasing at their fastest pace in 40 years, is squeezing profits.

That was confirmed by a separate report from the Commerce

Department on Thursday showing corporate profits from current production fell $66.4 billion, or a 2.3% rate, in the first quarter, the first drop in nearly two years.

The decline was across financial and nonfinancial corporations as well as overseas operations. After-tax profits dropped at a 4.3% rate after rising at only a 0.2% pace in the fourth quarter. Still, profits increased 12.5% from a year ago.

The Federal Reserve has raised its policy interest rate by 75 basis points since March. The U.S. central bank is expected to hike the overnight rate by half a percentage point at each of its next meetings in June and July.

But with a record 11.5 million job openings at the end of March, layoffs are likely to be minimal and people who lose a job can easily find another one.

Minutes of the Fed’s May 3-4 meeting published on Wednesday showed officials commenting that “demand for labor continued to outstrip available supply across many parts of the economy and that their business contacts continued to report difficulties in hiring and retaining workers.” Many expected the labor market to remain tight and wage pressures to stay elevated for some time.

“At this point, we do not see any change in the fundamental picture of a tight labor market with employers unwilling to fire workers,” said Conrad Dequadros, senior economic adviser at Brean Capital in New York.