U.S. housing starts fall; jobless claims hit 45-year low
WASHINGTON (Reuters) - U.S. homebuilding fell more than expected in December, recording its biggest drop in just over a year, amid a steep decline in the construction of single-family housing units following two months of hefty gains.
Other data on Thursday showed the number of Americans filing for unemployment benefits dropped to a 45-year low last week. The decline in claims for jobless benefits, however, probably exaggerated the health of the labor market as data for seven states, including California, were estimated.
Housing starts decreased 8.2 percent to a seasonally adjusted annual rate of 1.192 million units, the Commerce Department said. November's sales pace was revised up to 1.299 million units from the previously reported 1.297 million units.
The percentage drop for housing starts in December was the largest since November 2016. Economists polled by Reuters had forecast housing starts decreasing to a pace of 1.275 million units last month.
U.S. financial markets were little moved by the data.
Homebuilding increased 2.4 percent to 1.202 million units in 2017, the highest level since 2007. December's moderation in homebuilding is likely to be temporary amid strong demand for housing that is being driven by a robust labor market.
Builders, however, continue to struggle with labor and land shortages as well as more expensive lumber. A survey on Wednesday showed confidence among homebuilders slipping from an 18-year high in January. Builders expected a dip in buyer traffic and sales over the next six months.
Last month, single-family homebuilding, which accounts for the largest share of the housing market, tumbled 11.8 percent to a rate of 836,000 units as construction fell in the South, the Northeast and Midwest. Homebuilding was unchanged in the West.
Starts for the volatile multi-family housing segment rose 1.4 percent to a rate of 356,000 units.
While building permits edged down 0.1 percent to a rate of 1.302 million units in December, they outpaced starts. That suggests homebuilding will rebound in the coming months.
Building permits increased 4.7 percent to 1.263 million units in 2017, also the highest level since 2007.
Single-family home permits advanced 1.8 percent in December, while permits for the construction of multi-family homes fell 3.9 percent.
CLAIMS FALL SHARPLY
In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 220,000 for the week ended Jan. 13, the lowest level since February 1973.
Economists had forecast claims falling to 250,000 in the latest week. Claims had increased over the previous four weeks, with economists blaming difficulties adjusting the data for seasonal fluctuations around moving holidays and unseasonably cold weather.
The Labor Department said claims for California, Arkansas, Kentucky, Maine, Hawaii, Virginia and Wyoming were estimated. Government offices were closed on Monday for the Martin Luther King holiday.
It also said claims-taking procedures continued to be disrupted in the Virgin Islands months after they were battered by Hurricanes Irma and Maria, while claims processing in Puerto Rico was still not back to normal.
Last week marked the 150th straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.
The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent.
Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 6,250 to 244,500. The claims data covered the survey week for January's nonfarm payrolls.
The four-week average of claims rose 8,500 between the December and January survey periods, suggesting some moderation in the pace of job growth. Nonfarm payrolls increased by 148,000 in December after surging by 252,000 in November.
Job growth is slowing as the labor market nears full employment. There has been an increase in companies reporting difficulties finding qualified workers. There are about 5.9 million job openings in the country.
In its Beige Book report of anecdotal information on business activity collected from contacts nationwide, the Federal Reserve said on Wednesday that "most districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors."
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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