Thursday, December 16, 2004

Housing starts, jobless claims both dive unexpectedly

USA Today
WASHINGTON (Reuters) — Housing starts unexpectedly plummeted 13.1% last month, biggest dive in nearly 11 years, as groundbreaking fell sharply across the nation, a government report said Thursday.

Starts slid to a seasonally adjusted annual rate of 1.771 million units in November from an upwardly revised 2.039 million rate a month earlier, the Commerce Department said. It's the biggest drop since housing starts tumbled 17% in January 1994.

A second report Thursday said the number of Americans filing initial claims for unemployment benefits fell much more than expected last week to 317,000, steepest decline in three years.

A Reuters poll of analysts had forecast first-time claims for state unemployment benefits falling to 340,000 in the week ended Dec. 11 from 360,000 the previous week. This had initially been reported at 357,000.

A Labor Department official said last week's 43,000 drop was the largest weekly decrease since a 77,000 fall in December 2001. It brought weekly claims to their lowest level since July, before the U.S. economy hit a soft patch that hurt hiring.

On housing starts, economists had expected the number to ease slightly to a 1.980 million unit rate from the 2.027 million initially reported for October.

Low mortgage rates, which averaged around 5.7% in November, had been supporting the housing sector despite five short-term interest-rate rises from the Federal Reserve this year.

Permits for future groundbreaking, an indicator of builder confidence, also proved disappointing, slipping 1.5% to a 1.988 million unit pace. Analysts had looked for a 2.000 million permit rate.

The department said starts fell 14.2% in the Northeast, 19.4% in the Midwest, 13.2% in the West and 10.4% in the South, the region that boasts the lion's share of housing activity.

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