It was a glass-half-full day for economic data on Thursday ... sort of.
Jobless claims dropped for the second week in a row and the nation's retailers reported surprising sales gains for August. Productivity slipped in the spring in a sign that companies may have squeezed all they can out of workers. Factory orders rose slightly. And even the struggling housing market showed some signs of a pulse.
But for all the optimism, the good news was tempered by worries about what Friday's crucial unemployment report will say about the state of the labor market. Hiring has been anemic, and any sign of a deterioration could drain that half-full glass quickly.
"The risk is that (Friday's) U.S. jobs report provides a 'slap in the face' should the unemployment rate rise sharply," said Neil MacKinnon, global macro strategist at VTB Capital.
After digesting Thursdays figures, few experts saw signs that the economy is gaining momentum.
"It's encouraging that we're not seeing further deterioration as we have in recent months," said Julia Coronado, U.S. economist at BNP Paribas. "But we're not turning around and moving in the direction of stronger growth."
The number of people requesting unemployment benefits declined for the second straight week, suggesting that the slowing economy isn't prompting widespread job cuts. The Labor Department said Thursday new claims for unemployment aid fell last week by 6,000 to a seasonally adjusted 472,000. Economists had expected a slight increase, according to a survey by Thomson Reuters.
The four-week average of claims, a less-volatile measure, fell by 2,500 to 485,500, its first decrease after four straight increases.
Even with the declines, claims are still at much higher levels than they would be in a healthy economy. When economic output is growing rapidly and employers are hiring, claims generally drop below 400,000.
Still, some economists saw the report as mildly encouraging.
It appears "that a wave of panicked layoffs has passed, as companies have become a bit calmer in the face of the financial and economic disruptions of late spring and early summer," Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.
Meanwhile, the Labor Department said productivity dropped and the Commerce Department said factory orders rose after two straight months of decline.
Productivity slipped at an annual rate of 1.8 percent in the April-to-June quarter, double the 0.9 percent decline originally reported a month ago. Unit labor costs rose 1.1 percent, the biggest rise in labor costs since late 2008.
While lower productivity and higher labor costs could spell trouble for corporate profits, it could translate into more hiring and larger incomes for U.S. workers.
"We don't expect productivity to keep declining, but it's clear that it has become much more difficult for employers to extract ever more output from their existing workforces," said Nigel Gault, chief U.S. economist at IHS Global Insight.
Hiring has slowed to a crawl in recent months. The claims report comes one day before the Labor Department is scheduled to issue the August employment report. That is expected to show that private businesses added a net total of only 41,000 jobs last month, the fourth straight month of anemic hiring.
When government jobs are included, total payrolls are forecast to drop by 100,000 — based on about 115,000 temporary census jobs ending. The jobless rate is projected to rise to 9.6 percent from 9.5 percent, according to Thomson Reuters.
The number of people continuing to claim benefits fell by 23,000 to 4.46 million, the lowest since late June.
But that doesn't include millions of people who are receiving extended benefits under emergency programs enacted by Congress during the recession. More than 5.4 million people were on the extended benefit rolls during the week of Aug. 14, the latest data available. That's a drop of about 320,000 from the previous week.
Without more jobs, consumers will likely spend cautiously, making it harder for the economy to gain steam. Consumer spending accounts for about 70 percent of economic activity.
, the nation's merchants reported on Thursday. Sales were boosted by aggressive discounting, even as unusually hot weather and job worries kept a lid on back-to-school buying.
The figures still mask underlying weakness in consumer spending, because they're being compared with a weak August 2009. They're based on revenue at stores open at least a year, considered a key measurement of retailer health because it excludes the effects of stores that open or close during the year.
Meanwhile, , a sign that demand for housing remains weak.
The National Association of Realtors said Thursday its seasonally adjusted index rose 5.2 percent from a month earlier to a reading of 79.4. Economists surveyed by Thomson Reuters had expected the index would fall to 74.9.
The index was still down 19 percent from the same month last year. June's reading was the lowest on records dating to 2001. It was revised slightly downward to 75.5.
The index provides an early measurement of sales activity because there is usually a one- to two-month lag between a sales contract and a completed deal.
New orders received by U.S. factories edged up in July after two straight months of decline on robust demand for new transportation equipment, according to the Commerce Department.
Factory orders edged up 0.1 percent in July, but the strength came in the volatile transportation sector. Excluding transportation, orders were down 1.5 percent, the biggest drop in this category in 16 months.
Manufacturing has been the standout performer so far in this recovery with American companies benefiting from stronger growth in China and other developing nations, which has helped offset sluggish U.S. consumer demand.
Concerns that manufacturing could be faltering were eased on Wednesday with a report from the Institute for Supply Management showing that its closely watched gauge of manufacturing activity posted a stronger-than-expected reading of 56.3 in August. Additionally, a manufacturing index for China also showed a solid gain and car sales in that country surged.
The Chinese activity was seen as encouraging for the global economy given that China is now the world's second biggest economy. Rapid growth in China has provided a market for U.S. and other foreign manufacturers.