AP Economics Writer
Washington — A handful of economic reports released Thursday raised hopes for an improving job market with fewer layoffs and more hiring.
Productivity slowed more than initially estimated in the first quarter of the year, a sign that employers are struggling to squeeze more work out of leaner staffs. The lower figure was expected after the government last week revised its growth estimate for the first quarter.
The number of people filing first-time jobless claims declined for a second straight week, though it remains elevated for the year.
And an index that tracks activity in the U.S. service sector showed job growth in May — the first time in 28 months.
Economists predict Friday’s employment report will show that 513,000 net jobs were added in May. Still, most of those jobs are expected to be temporary census work. Analysts said layoffs will continue to taper off and that companies will gradually increase hiring.
“While we will see a period of job growth, it is going to take a long time to get back the jobs we lost,” said Mark Zandi, chief economist at Moody’s Analytics. Zandi said he expects it will take until 2013 for the economy to create enough jobs to recoup the 8 million jobs lost during the downturn.
Jennifer Lee, an economist at BMO Capital Markets, said: “The jobs data so far this morning haven’t screamed strength, but they continue to set an encouraging tone.”
Adding to the picture of a slow recovery were reports Thursday showing modest increases in factory orders and retail sales.
Orders to U.S. factories climbed in April, pulled up by a surge in demand for commercial aircraft, according to the Commerce Department. But the overall increase was smaller than the uptick in March orders. And excluding transportation, orders fell in April 0.5 percent — the poorest showing in 13 months.
Americans spent with caution in May after a tepid April, according to the International Council of Shopping Center index released Thursday. Cool weather and a quirk in the calendar — a late Memorial Day weekend — dampened May spending. But analysts also cited high unemployment, stock market jitters and the dwindling of government-paid rebates on energy-efficient appliances.
Hiring may pick up if businesses find they’ve reached the limits on wringing work out of thinner ranks.
Productivity advanced at an annual rate of 2.8 percent in the January-March period, according to the Labor Department. That is the slowest pace in a year and lower than the 3.6 percent rate the government initially reported last month. Labor costs declined, though less than initially estimated.
A separate Labor report Thursday showed layoffs fell for a second straight week. They declined by 10,000 to 453,000 last week. Still, the declines come after a sharp increase three weeks ago and claims remain at elevated levels.
Jobless claims are closely watched by economists because they are considered a gauge of layoffs and a measure of companies’ willingness to hire new workers.
After falling steadily in the second half of 2009, claims have leveled off and are now only slightly below their level at the start of this year. That has raised concerns among some economists that hiring is still sluggish.
AP Business Writers Alan Zibel and Christopher S. Rugaber contributed to this report from Washington and Anne D’Innocenzio from New York.