WASHINGTON: New applications for U.S. unemployment benefits fell last week amid low layoffs, suggesting labour market conditions remained calm in March, though economists have warned that a prolonged war in the Middle East posed a downside risk.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 202,000 for the week ended March 28, the Labor Department said on Thursday.

Economists polled by Reuters had forecast 212,000 claims for the latest week. Claims have moved in a 201,000-230,000 range this year, consistent with what economists describe as a "low hire, low fire" labour market. They have blamed the labour market stagnation on lingering uncertainty caused by President Donald Trump's aggressive import tariffs.

Private nonfarm payrolls have averaged growth of only 18,000 jobs per month in the three months through February. Reduced labour supply because of the Trump administration's hard-line immigration policy was also hampering job growth, economists said.

The month-long U.S.-Israel war with Iran has also added another layer of uncertainty for businesses.

Trump on Wednesday vowed more aggressive strikes on Iran. Though job growth likely rebounded by 60,000 in March, according to a Reuters survey of economists, some warned the reversal could be temporary because of the conflict, which has sent global oil prices soaring more than 50%.