There was some encouraging news on U.S. labour productivity and jobless claims today, along with stronger than expected U.S. retail sales.

U.S. workers were much more productive than previously thought in the fourth quarter of 2004.

The U.S. Labor Department said today that nonfarm business productivity grew at a seasonally adjusted annual rate of 2.1% from October through December. That was up from the initial estimate of a 0.8% increase and well above the 1.3% rate recorded in the third quarter.

However, U.S. labour productivity slowed over the course of 2004: the annual rate was 4%, down from 4.4% in 2003.

Separately, the U.S. Labor Department said initial jobless claims fell by 1,000 to 310,000, after seasonal adjustments, in the week that ended Feb. 26. Economists expected claims to rise by 6,000.

U.S. retailers saw improved sales in February. The International Council of Shopping Centers-UBS sales preliminary tally of 52 stores rose 4.4%, much better than the 3.3% increase it had projected. The tally is based on same-store sales,

Meanwhile, U.S. service sector businesses grew in February at a pace nearly matching that of the month before, amid quickening growth in hiring and largely stable gains in price pressures.

A report from the Institute for Supply Management said that the private research group’s non-manufacturing index moved to 59.8 last month, versus 59.2 in January and 63.9 in December. Readings above 50 are a sign of growth.

Economists had expected the index to move up to 60.0.

The new orders index was 61.6, from 60.5 in January, while its employment gauge hit 59.6, after 52.2 the month before. Service sector hiring has grown for 17 straight months. Inflation pressures in the sector remained elevated, with the prices index coming in at 66.4, down a hair from 66.6 in January.