WASHINGTON – A handful of economic reports released Thursday indicated a slowly improving job market may begin reducing layoffs and increasing 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 dipped 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 for the first time in 28 months.

Economists predicted that today’s employment report will show that 513,000 net jobs were added in May. Still, a majority of those jobs are expected to be temporary census work. Analysts say 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 expects it to take until 2013 for the economy to create enough jobs to recoup the 8 million positions 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, the Commerce Department said. But the overall increase was smaller than the uptick in March orders. And excluding transportation, orders actually fell in April by 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-funded 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, the Labor Department said Thursday. 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.

The downward revision in productivity reflected the government’s revised estimate of total output as measured by the gross domestic product. GDP was revised to show the economy growing at a 3 percent rate in the first quarter, down from an initial estimate of 3.2 percent.

Less output translated into slower productivity growth, which is a measure of the output per hour of work.

A separate Labor report Thursday showed layoffs fell for a second straight week. They dipped by 10,000 to 453,000 last week, but claims remain at elevated levels.


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