WASHINGTON - The number of Americans filing new claims for unemployment aid hit a five-year low last week, and residential construction surged in December, the latest signs that the U.S. economic recovery remains on track.
WASHINGTON — The number of Americans filing new claims for unemployment aid hit a five-year low last week, and residential construction surged in December, the latest signs that the U.S. economic recovery remains on track.
The reports yesterday showed the economy was weathering an uncertain fiscal environment surprisingly well. Still, growth in the fourth quarter was likely subdued, and only a modest pick-up was expected in the first three months of this year.
“While growth has been slow, the damage done from the uncertainty surrounding the ‘fiscal cliff’ was not sufficient to topple the recovery,” said Millan Mulraine, a senior economist at TD Securities in New York.
The fiscal cliff refers to a wave of deep government spending cuts and tax increases, part of which was avoided after a last-minute agreement by lawmakers. A fight over raising the government’s borrowing limit looms.
Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said yesterday. It was the largest weekly drop since February 2010 and ended four straight weeks of increases.
While problems adjusting the data for seasonal fluctuations might have exaggerated the size of the decline, economists said the report still suggested an improvement in sluggish labor-market conditions and the broader economy as a whole.
“Having taken a pinch of salt, however, we would suggest that the trend in claims generally shows no pickup in layoff activity around the turn of the year,” said John Ryding, chief economist at RDQ Economics in New York.
The fairly upbeat jobs and housing data helped to lift U.S. stocks to a five-year high and supported oil prices. U.S. Treasury debt prices fell, and the dollar was little changed against a basket of currencies.
A separate report from the Commerce Department showed housing starts jumped 12.1 percent last month to their highest level since June 2008. Permits for future home construction were also the highest in about 41/2 years.
Though warm weather likely helped, the data was confirmation of the improving housing-market tone, and gains in home building were across all four regions. Groundbreaking increased for both single-family homes and multifamily units.
Housing is no longer a drag on the economy, and residential construction is expected to have contributed to growth last year for the first time since 2005.
The reports came on the heels of data this week showing solid retail sales and manufacturing growth in December.