Latest Jobs, Housing Reports Show Recession Isn't Over

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 Thursday that showed the economy still being held back by the recession.

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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.

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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 labor 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 Labor Department said the number of U.S. 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.

A Labor Department official said the majority of the decline in new claims came from states that had posted large increases in claims in the previous few weeks, mainly from layoffs in the automotive sector and other short-term layoffs.

He said new claims due to the timing of the spring break vacation, as well as a changeover between calendar quarters, might also have influenced claims, which were lower than expected by seasonal factors estimated by the Labor Department.

The number of people staying on the benefits roll after drawing an initial week of aid rose 172,000 to a more-then-forecast 6.022 million in the week ended April 4, the most recent week for which data is available.

It was the highest level of continued claims on record and pushed the insured unemployment rate to 4.5 percent, the highest since 1983, from 4.4 percent the previous week.

Analysts estimated continued claims would be 5.89 million.

The most severe U.S. 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 stabilizing, 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 U.S. central bank to drive down home loan costs.

The U.S. 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.

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