Just call it a tread water week for U.S. jobless claims, as they fell 12,000 last week to 409,000, the U.S. Labor Department announced Thursday The drop, however, is a qualified one because some of the decline stemmed from the fact that initial claims from two weeks ago were revised up to 421,000 from the initially estimated 417,000.

Also, the more telling, less-volatile four-week moving average rose 1,750 to 410,250.

A Bloomberg survey had expected initial jobless claims to total 410,000.

One unqualified bright spot in last week's report: continuing claims declined another 18,000 to 3.75 million. A year ago, continuing claims totaled 4.45 million in early September 2010.

If jobless continue to rise or remain above 400,000 in the weeks ahead, that would signal to economists and investors that commercial activity is decreasing and that most companies are, at minimum, unlikely to commit to hiring. Some companies may resume laying off employees.

Productivity Dips In Second Quarter

Separately, U.S. worker productivity fell 0.7 percent in the second quarter, a downward revision from the initially-released 0.3% decline for the second quarter, and unit labor costs rose 3.3 percent, up from the initially-estimated 2.2 percent rise. A Bloomberg survey had expected productivity to decline 0.5% and unit labor costs to rise 2.6% in the second quarter.

Returning to the jobless claims report, states also reported 3.18 million persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending August 13, the latest week for which data is available, an increase of 31,261 from the prior week. A year ago, there were 4.56 million people claiming EUC benefits.

Labor Market/Economic Analysis: Jobless claims remain above the key 400,000 level, indicative of a weak job market. Jobless claims must fall and remain below 400,000 to give institutional investors confidence that the economic recovery is strengthening.

That means policy makers, both public and private, must find ways to create jobs: the nation's high unemployment rate is the biggest threat to the economic expansion's durability, and ultimately, to corporate revenue and earnings growth.