The number of Americans filing new claims for unemployment benefits fell last week, showing little sign of a pick-up in layoffs in the wake of a slump in business and consumer confidence.
Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 409,000, the U.S. Labor Department said on Thursday.
While the figure still points to a jobs market struggling to find strength, it remains well short of a recession signal.
While the claims data has no bearing on August's non-farm payrolls count to be released on Friday, it showed no evidence that businesses responded to the recent financial market turmoil by aggressively laying off workers.
Other reports suggested consumers also did not pull back in August. Some top U.S. retailers on Thursday reported better-than-expected sales last month, despite sagging consumer confidence and Hurricane Irene.
Non-farm employment is expected to have increased 75,000 in August, according to a Reuters survey, dampened by a strike at Verizon Communications. Payrolls rose 117,000 in July.
About 45,000 Verizon workers went on strike during the survey period for August payrolls. Because they did not receive a paycheck that week, they would be counted as jobless in the government's payrolls count.
A U.S. Labor Department official said there were no special factors influencing last week's claims report. The Verizon strike helped to push up claims in the last two weeks.
The four-week moving average of claims, considered a better measure of labor market trends, rose 1,750 to 410,250 last week. The number of people still receiving benefits under regular state programs after an initial week of aid dropped 18,000 to 3.74 million in the week ended August 20.
A second report from the U.S. Labor Department underscored the economy's lingering weakness, with non-farm productivity falling at a 0.7% annual rate in the second quarter -- the biggest decline since the fourth quarter of 2008. That was a downward revision to the previous estimate of a 0.3% fall and the second straight quarterly decline.
A slowdown in productivity usually suggests that businesses have to add new workers to meet production, but against the backdrop of an economy growing at a near stall-speed, it implies businesses might have to cut costs to protect profits.
The report showed unit labour cost growth much stronger than previously estimated.
Unit labour costs grew at a more sturdy 3.3% rate in the second quarter rather than 2.2%.
However, the revised pace is still slower than the 6.2% rate in the first quarter, indicating wage pressures remain too well contained to stoke a broader rise in inflation.
Economists had expected the growth in second-quarter unit labor costs to be revised up to a 2.4% rate.
