Anyone hoping for a dovish round of data out of the US was pleased Thursday, when continuing claims topped estimates and unit labor costs were revised lower.

The updates didn’t count as “top-tier” by any stretch, particularly coming as they did 24 hours before a jobs report, but they nevertheless took some of the edge off vis-à-vis “no landing” concerns and associated speculation about a more hawkish policy trajectory from the Fed.

At 1.906 million, ongoing claims in the week to February 24 were well ahead of consensus and the second-highest since November of 2021.

Frustrated recession spotters bedeviled by a persistently subdued initial filers series have at times turned to the continuing claims prints to make their case. This week, they have a case to make. And with the “no landing” narrative getting quite a bit of airplay again, we’re probably nearing “bad news is good news” territory in terms of the incoming data.

Notwithstanding Jerome Powell’s “no surprises” approach to this week’s congressional testimony (he blindsided some observers by suggesting contentious capital plans for banks might get a wholesale rethink, but that’s not relevant for the near-term macro-policy narrative), some officials seem uncomfortable. Raphael Bostic talked about “pent-up exuberance” this week and Neel Kashkari suggested the Fed might only cut rates once this year, for example. A few more data overshoots and we’ll be looking at a median dot that reflects 50bps of 2024 easing instead of the 75bps tipped in the December SEP. At some point, that’ll weigh on buoyant equities, even if the implied economic strength bodes well for corporate profits.

Here’s the key: Hawkish leans from Bostic and Kashkari aside, Powell’s inclined to stick to the script for now, and you can make the case that the balance of data headed into payrolls was dovish even before Thursday’s continuing claims overshoot. ISM manufacturing missed, ISM services saw the prices gauge recede more than expected, the quit rate in the JOLTS release fell to the lowest since August of 2020 (despite a stubborn headline job openings figure) and ADP was a touch below consensus.

Between all of that, the dollar index slipped to the lowest since late January and 10-year US yields staged their biggest two-day rally in over a month.

Thursday’s data should, at the margins anyway, help the nascent dovish turn along, even as Friday’s NFP headline and, just as importantly, the accompanying AHE update, is really all that matters.

The above-mentioned ULC revision was helpful. Recall that the initial print for Q4 — a 0.5% increase — was already much slower than anticipated, even as it meant rising comp costs overwhelmed another healthy increase in productivity. That 0.5% uptick was revised on Thursday to show a 0.4% gain. Economists expected 0.7% — so, an upward revision versus the downwardly-revised print the BLS actually delivered.

What does it all mean? Well, it underscores the extent to which the narrative’s always evolving for one thing. Fed officials are pretty plainly (and understandably) focusing on January’s inflation overshoot(s) and on generalized economic resilience. But the “here and now” ebb and flow of the data seems to be tilting back in a dovish direction (with the caveat that “here and now” is always a misnomer considering the data’s a snapshot of last week at best, and usually last month or even last quarter).

Make of it what you will and keep in mind that as is always the case headed out of the first full week of a given month (and, more to point, headed into the second), the evolution of the macro narrative hinges entirely on NFP.