After two rough months of poor jobs growth, the US labor market looks poised for a small June rebound in Friday's official data but weak hiring remains the biggest roadblock to recovery.
A trio of positive indicators Thursday offered a bit of wind behind hopes for a better reading to close out a lackluster second quarter.
A day ahead of the government's keenly awaited June labor data, the Labor Department reported a better-than-expected reading on initial claims for unemployment benefits.
New jobless claims -- an indicator of the pace of layoffs -- fell by 14,000 last week to their lowest reading since mid-May.
Planned layoffs fell to a 13-month low in June, and were 39 percent lower than the announced job cuts in May, global outplacement consultancy Challenger, Gray & Christmas said.
And a closely watched gauge of private-sector hiring showed an encouraging rise in new jobs, mainly in small and medium-sized business.
Payrolls company ADP said that the US private sector added 176,000 jobs in June, 29 percent more than in May and better that economists' forecasts.
The fresh data holds out some promise, given the economy's weakness.
"While tomorrow's employment numbers may not be great, it is beginning to look like the labor market is not nearly as weak as feared," said Joel Naroff of Naroff Economic Advisors.
In Friday's much-awaited June jobs market data release, analysts expect the unemployment rate to come in unchanged at 8.2 percent, with just 100,000 jobs added last month.
Job creation in May was a meager 69,000, far below the estimated 250,000 a month trend needed to bring down unemployment significantly.
Even as layoffs may be easing, hiring remains dull. Faced with a sluggish domestic economy, fiscal uncertainty and threats to growth from Europe's debt crisis, employers have been reluctant to add jobs.
About 12.7 million people were counted as unemployed in May, almost three years after the Great Recession. More than two out of five were considered "long-term unemployed" -- jobless for at least 27 weeks.
"With the pace of job cuts generally improved from the height of the recession and closer to a level consistent with growth, it is a lack of hiring that remains the biggest hurdle for the labor market," said Sara Kline at Moody's Analytics.
"In conjunction with the morning's upside surprise from ADP about net private-sector job creation in June, the lower initial jobless claims number... does bode well for strength extending into July," she said.
Nevertheless, there are recent signs of slowing growth in the economy from the first quarter's anemic 1.9 percent pace. On Thursday, the Institute for Supply Management delivered its second jolt of negative growth news for June.
After reporting Monday that manufacturing fell for the first time in three years, the ISM said that growth slowed in services, the sector that accounts for two-thirds of the world's largest economy.
The ISM's non-manufacturing index fell to 52.1 percent last month from 53.7 percent in May.
A reading above 50 indicates growth in activity in the non-manufacturing sector, which accounts for about 70 percent of the US economy. A number below 50 means contraction.
"The number of industries reporting growth has declined steadily since March, which is the month that job growth started slowing as well," said Jennifer Lee at BMO Capital Markets.