The number of Americans claiming jobless aid hit a record early in April and groundbreaking for new homes slumped sharply in March, according to data on Thursday that showed the economy still being held back by the recession. However, new claims for jobless aid dropped unexpectedly last week in a potentially brighter sign for employment, while the steep decline in new housing starts might help work off its heavy overhang in unsold homes.
But the overall tone of the data was bleak and jarred with other more promising signs that the recession might be fading. "Taken together, both releases will put a damp on the nascent optimism we've seen in the markets in the past couple of weeks," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto. "While the situation in housing and in the labour markets is not necessarily deteriorating, it's clear that there is no real sign of recovery whatsoever," he said.
The Commerce Department said housing starts fell 10.8 percent to a seasonally adjusted annual rate of 510,000 units, the second lowest on records dating back to 1959, from February's 572,000 units. Analysts polled by Reuters had expected an annual rate of 540,000 units for March.
In a separate report, the Labour Department said the number of US workers filing new claims for jobless benefits unexpectedly fell 53,000 last week to 610,000. But so-called continued claims rose to a fresh record of 6.02 million in the week ended April 4.
The most severe US recession in a generation has already cost 5 million jobs, driving unemployment to 8.5 percent in March and many economists see it heading higher. The Federal Reserve, in a regular survey of regional business conditions, said on Wednesday the labor market remained soft with lay-offs and hiring freezes widespread.
The housing starts data were at odds somewhat with other more encouraging readings from the battered property sector. The Fed also said on Wednesday it saw signs the housing market was stabilising, with an increase in the number of prospective buyers improving confidence.
House hunters are being lured by very low mortgage rates following hefty efforts by the US central bank to drive down home loan costs. The US central bank has cut interest rates to almost zero and pumped over $1 trillion into credit markets, including massive purchases of mortgage backed securities, to encourage spending and investment.
Comments
Comments are closed.