Unexpected strength from weekly US jobless claims provided rare good news for the troubled US economy on Thursday, but a measure of buying demand in the housing market continued to chill.
The number of US workers applying for jobless benefits fell unexpectedly last week to the lowest level in four months, government data showed, signalling steadier labour market conditions that few had dared to imagine amid widespread talk of recession.
"They are encouraging figures; this time the continued claims fell as well. The data seems to be suggesting a stronger payroll in January after the weak December," said David Sloan, senior economist at 4Cast Ltd in New York.
Wall street stocks rallied on the latest economic data. The Dow Jones industrial average was up 0.30 percent at 12,306.75 in morning trading, while the Nasdaq Composite Index rose 1.05 percent to 2,340.77. US Treasury bonds were mostly lower, paring earlier gains. The Labour Department reported first-time claims for state unemployment benefits fell to a seasonally adjusted 301,000 in the week ended January 19, from a slightly revised 302,000 the prior week.
A mere 18,000 new jobs were created last month, intensifying speculation that US growth would slacken and turn negative. A Labour Department official said there were no special factors behind the drop in jobless benefits. But it ran against the expectations of Wall Street economists, who had forecast an increase to 325,000 claims from the originally reported 301,000 for the week ended January 12, according to a Reuters poll.
The number of people remaining on the benefit rolls after drawing an initial week of aid fell by 75,000 to 2.67 million in the week ended January 12, the latest week for which figures were available. Economists polled had forecast the so-called continued claims at 2.72 million.
HOUSING WOE: US growth has faltered amid a slumping housing market that sparked a global credit crunch, making it harder to borrow and further hurting demand. US existing home sales last month added to this gloomy picture.
Existing home sales in the United States fell by 2.2 percent in December to a slower-than-expected 4.89 million-unit annual rate, the National Association of Realtors said in a report. The inventory of homes for sale fell 7.4 percent to 3.91 million units at the end of last month. That represented a 9.6-month supply at the current sales pace, down from the 10.1-month supply in November.
Economists polled by Reuters had expected home resales to slip to a 4.95 million-unit pace after hitting a 5.00 million-unit pace in November. For all of 2007, existing home sales fell 12.8 percent and the national median home price fell by 1.4 percent to $218,900. It was the first annual decline in the median home price since 1999, when the Realtor group began tracking both condos and single-family home data together.
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