A flurry of government and private sector reports show the US economic recovery moving forward while also raising concerns about its durability.
Reports on business investment and worker productivity showed improvement, but these were offset by weak readings on retail sales and the economy's service sector as well as by stubbornly high rates of filings for jobless benefits.
"It's still the stumbling recovery," said Steve Ricchiuto, chief economist with ABN Amro in New York.
Despite the bevy of economic data out Thursday, economists were looking toward Friday's release of August unemployment for a more up-to-date read on the US economy. Analysts polled by Reuters expect the jobless rate to hold steady at 5.9 per cent, with payrolls posting a narrow 37,000-job gain.
Thursday's data did little to cheer a jittery Wall Street. The Dow Jones industrial average was off by 141.42 points, or 1.68 per cent. The tech-laden Nasdaq composite fell by 41.31 points, or 3.20 per cent.
In a weekly report, the Labour Department said claims for unemployment benefits fell in the week ended August 31, the first decline since the week ended August 3. Claims dipped to 403,000 from a revised 411,000 in the previous week.
However, the fact that claims spent a second straight week above the 400,000 level - seen as a sign of a weak job market - raised fears the economy is struggling to generate jobs.
The four-week moving average, which many analysts look to as a more reliable indicator of trends in the report, also rose, climbing to 400,000 for the first time since June.
"The hemorrhaging of (jobs) has very nearly stabilised at a moderate pace, which constitutes one-half of the unemployment equation. It's the other half of the equation - rehiring - that has yet to show any renewed life," said Ken Mayland, chief economist with ClearView Economics in Pepper Pike, Ohio.
A stagnant labour market raises the risk consumers could pull back on their spending, which makes up two-thirds of overall economic activity. Reports on Thursday of sales at chain store retailers hinted at tighter purse strings - at least for items other than cars. Automobile sales have boomed recently with buyers lured by renewed financing incentives.
Major automakers reported on Wednesday that US auto sales surged to their highest level this year in August, as consumers seized on interest-free loans and hefty cash rebates to buy new vehicles at a near-record pace.
August may have been a bumper month for auto dealerships, but things were not so bountiful for stores. August same-store sales grew 1.6 per cent, not far from expectations for a rise of 1.5 per cent for the month but down from a 3.6 per cent increase a year ago, according to the Bank of Tokyo-Mitsubishi Ltd.
"It's a weak performance but it's coming in at about what we expected," said Michael Niemira, an economist with the bank. "But when you put the pieces together with car sales, it shows the consumer is willing to spend, but maybe not on apparel."
Wal-Mart Stores said its August sales rose 3.8 per cent versus a year ago, below its expectations. Another big discounter, Target Corp., said its sales fell 0.1 per cent in the month.
Department stores struggled during the month with Sears, Roebuck and Co. posting a same-store sales drop of 11.1 per cent and Federated Department Stores, which runs Macy's and Bloomingdales, logging an August sales drop of 5.8 per cent. Saks Inc.'s August sales fell 3.3 per cent.
There were more gloomy tidings for the economy in another private-sector report as well. The Institute for Supply Management's monthly index of non-manufacturing activity slipped to 50.9 in August from 53.1 in July, the group said, barely putting it in positive territory.
The government reports were more upbeat, however. Labour said second-quarter productivity growth slowed sharply from the first quarter, but was higher than initially thought. Output per worker hour grew at a 1.5 per cent annual rate, down from the 8.6 per cent annual pace seen in the first quarter but above the 1.1 per cent rate originally estimated in July. The year-over-year 4.8 per cent clip was the fastest growth rate since the fourth quarter of 1983.
Separately, the Commerce Department said July factory orders surged by 4.7 per cent, boosted by a record jump in orders for machinery.
Shipments of non-aircraft capital goods outside of the defense sector rose 3 per cent, which economists said was a sign businesses are starting to feel more confident about the recovery and hence more willing to replace outdated equipment with newer, more productive models.