Worker productivity has surged at the fastest pace in six years, labor costs fell and unemployment claims were lower than forecast, signaling that companies may be preparing to start hiring again after cutting costs to the bone.

October retail sales results, also released Thursday, were the best since April 2008. Stocks climbed on these signs that the economic recovery is gaining strength while generating little inflationary pressure.

The Dow Jones industrial average jumped 200 points to 10,005.96 -- its first close above 10,000 in two weeks, while the Nasdaq composite index led major indexes with a gain of 2.4 percent after Cisco, the maker of computer-networking gear, predicted its revenue would grow.

A report Friday may show that employers cut jobs at the slowest pace in more than a year as they begin to anticipate sales gains.

Productivity, a measure of employee output per hour, jumped at a 9.5 percent annual rate in the third quarter, exceeding the highest economist forecast, according to Labor Department figures released Thursday. Initial jobless claims dropped by 20,000 to 512,000 in the week ended Oct. 31, the fewest since January.

The jump in productivity ``tells the Fed it can be on hold for quite some time,'' said Dean Maki, chief U.S. economist at Barclays Capital in New York, whose forecast was the highest among economists surveyed. ``Business investment spending and employment will be pushed higher in the next few months.''

Labor costs fell at a 5.2 percent rate, capping the biggest 12-month drop since records began in 1948 and exceeding the median forecast for a 4.2 percent decline projected by economists. Costs in the prior quarter fell 6.1 percent, more than previously estimated.

Meanwhile, sales at stores open at least a year rose 2.1 percent in October, according to the International Council of Shopping Centers-Goldman Sachs tally, compared with a 4.2 percent drop in October 2008. The results beat estimates for a 1 percent gain and followed a surprising 0.6 percent increase in September.

Sales at stores open at least a year are considered a key indicator of a retailer's health.

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