Despite positive reports on U.S. productivity and initial jobless claims, as well as some good retail shopping news, Wall Street futures are down, pointing to a sluggish start for North American equity markets Thursday.

The U.S. Labor Department said that productivity increased at the fastest rate in nine months during the second quarter. Non-farm business productivity grew 5.7%, the biggest increase since the third quarter of 2002. This let employers to slash jobs and still meet rising demand for goods and services, said Labour. The surge caused unit labor costs to fall sharply and made a positive contribution to dampening inflation

In a separate release, the Labor Department reported that initial jobless claims dropped by 3,000 to 388,000 in the week that ended Saturday. That was the lowest in six months. While this appears to show a stabilizing labour market, the report is rather paradoxical when set against the job cuts described in the productivity report.

Several U.S. retail chains are reporting today. Wal-Mart Stores Inc. reported a better-than-expected increase in same-store sales for July and raised its earnings guidance for the second quarter. Sales at stores open a year or more climbed 4.6% for the four weeks ended Aug. 1. J.C. Penney Co. posted an increased of 3.7%, while May Department Stores reported a 1.8% gain and Bon Ton Stores saw an increase of 0.1%. Sears, Roebuck & Co., however, saw same-store sales slide 0.8%. Overall sales were about the same at $1.92 billion. Federated Department Stores Inc. posted a 0.4% decline in same-store sales, though the decline was not as sharp as expected.

Despite positive indications of consumer spending, which have been attributed to the Bush tax cuts, some analyst are saying is that the extra bit of pocket money doesn’t last long enough to have a lasting effect for consumers, and have resulted in the drop in Wall Street futures.

Here at home, Air Canada is the news again. The airline is reporting that it lost $566 million in the second quarter as the SARS crisis continued to keep the travel industry in a multi-year slump.

Overnight, the major Asian markets ended lower. Tokyo’s Nikkei fell 58.35 points Thursday. It dropped 0.63% to 9,265.56, falling for a fourth straight session.

In Hong Kong, shares closed slightly lower as investors stuck to the sidelines. The Hang Seng Index dropped 29.49 points, or 0.3%, to 9,958.05.

In Europe, London’s FTSE 100 is up 4.2% at midday, but Frankfurt’s DAX is down 1.61% and Paris’s CAC 40 has fallen 0.12%.