U.S. jobless claims posted their sharpest drop in three years last week in a sign of job market cheer, but housing starts in November logged their biggest plunge in nearly 11 years, the government said Thursday.
In a third report, the government said the shortfall in the U.S. current account widened to a record $164.71 billion — reflecting the U.S. consumer’s seemingly insatiable appetite for imported goods.
The mixed bag of economic data had little impact on currency and Treasury bond prices.
First-time claims for jobless benefits fell by much more than expected in the week ending Dec. 11 to 317,000, their lowest level since July, Labor Department data showed.
Wall Street economists had expected a dip to 340,000.
The Labor Department said there were no special factors to account for the drop, the largest since a 77,000 fall in December 2001, but cautioned claims are often volatile in the holiday period.
“It brings the claims number back down to a level that’s really very positive,” said Patrick Fearon, economist at A.G. Edwards & Sons in St. Louis.
A four-week moving average of filings, which smooths weekly fluctuations for a better picture of underlying trends, retreated to 337,750 from a revised 342,250.
Beginning of the end?
A separate report showed housing starts unexpectedly plummeted 13.1 percent last month, the biggest dive since a 17 percent tumble in January 1994, as groundbreaking activity fell sharply across the nation.
Housing starts slid to an annual rate of 1.771 million units in November from an upwardly revised 2.039 million clip a month earlier, the Commerce Department said.
Economists had expected starts to ease only slightly and some saw the report as a sign of brewing trouble for the long high-flying U.S. housing sector.
“The housing market is finally beginning to cool off. This is the beginning of the end,” said David Wyss, chief economist for Standard & Poor’s. “The housing number is scary.”
Permits for future groundbreaking, an indication of builder confidence, were less disappointing. They fell just 1.5 percent to a 1.988 million unit pace.
The report showed widespread weakness, with starts down 14.2 percent in the Northeast, 19.4 percent in the Midwest, 13.2 percent in the West and 10.4 percent in the South, which boasts the lion’s share of housing activity.
Trade gap widens
In a separate set of data, one that has been garnering close attention in currency markets, the Commerce Department said the U.S. current account deficit widened slightly to a record $164.71 billion in the third quarter.
While it hit a record, the gap — running at a hefty 5.6 percent of the size of the U.S. economy — still came in a good bit below the $170 billion reading Wall Street had braced for.
The deficit in the current account, the broadest measure of U.S. trade with the rest of the world since it includes investment flows, grew by just $318 million in the July-September period from a revised second-quarter reading of $164.39 billion, the Commerce Department said.
Since the third-quarter reading came in narrower than expected and slimmer than the previously reported second-quarter gap of $166.18 billion, markets largely took the report in stride.
The dollar has fallen roughly 5 percent against the euro this year and some 4 percent against a basket of major currencies in part on worry the willingness of foreign investors to finance the huge U.S. trade shortfall will fade.
Economists have warned of the potential for a steep dollar drop if foreigners loose their appetite for U.S. assets.
The Commerce Department said the goods shortfall grew to a record $166.73 billion from $163.58 billion.