NEW YORK (CNNMoney.com) - Signs of slowing economic growth trumped inflation concerns in the Treasury market Thursday, but the economic reading investors are most eagerly anticipating comes Friday when the government releases its monthly employment report.

The dollar gained against the euro and yen.

The benchmark 10-year note added 3/32 to 100-5/32 to yield 5.11 percent, down from 5.12 percent late Wednesday.

The 30-year bond gained 10/32 to 89-16/32 to yield 5.20 percent, down from 5.21 percent the previous session. Bond prices and yields move in opposite directions.

The five-year note rose one tick to yield 5.03 percent, and the two-year note was little changed, yielding 5.03 percent.

Financial markets reacted positively to the slew of economic reports released Thursday. Stocks and bonds both advanced as investors applauded signs of cooling economic growth.

All eyes are now on the May jobs report, which is due Friday. Many investors are looking to the employment report for clues about what the Federal Reserve will do with short-term interest rates when it meets later this month. (Full story.)

Thursday's economic reports came in mostly weaker.

The Institute for Supply Management said its index of manufacturing activity fell to 54.4 in May from 57.3 in April. Economists surveyed by Briefing.com had expected the reading to decline to 55.7. A reading above 50 points to growth in the manufacturing sector.

"Overall, we have growth but we have slower growth," Mary Ann Hurley, senior Treasurys trader at brokerage D.A. Davidson, told Reuters.

The survey's prices paid index, however, offered some worrying inflation data. That index, which measures inflationary pressures within the factory sector, surged to 77 from 71.5.

Bond investors hate inflation because it erodes the value of their fixed-interest paying investments.

The Labor Department revised business productivity for the first quarter up to a 3.7 percent annual rate from an initially reported 3.2 percent rise.

The figure missed Wall Street's expectations - economists surveyed by Briefing.com had expected the number to jump to 3.9 percent - but the report also showed the labor costs were better contained, which could help soothe inflation concerns.

Weekly jobless claims rose unexpectedly to 336,000 in the week ended May 27.

The report said the four-week moving average of claims, which is considered a better gauge of the labor market, jumped to 333,500. That was the highest level since October, when claims rose as a result of hurricanes that slammed the Gulf Coast.

In currency trading, the euro bought $1.2796, down from $1.2824 late Wednesday. The dollar traded at ¥112.65, up slightly from ¥112.47 the previous session.

-- from staff and wire reports

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