Employment, Job Reports Signal Growth

More signs of an expanding economy emerged Thursday, including a surprising surge in home building, a jump in workplace productivity and an unemployment-claims level suggesting modest job growth.

The strong reports weakened bond prices, fueling investor fears of increased inflation and interest rates.

Stocks, however, were mixed. While the Dow Jones industrial average rose 9.61 points to 5,635.05 and the Nasdaq composite index and American Stock Exchange market value index both reached new highs, some other indexes slipped.

Construction of new homes and apartments shot up 5.9% in April to a two-year high of 1.52 million units at a seasonally adjusted annual rate.

The Labor Department also reported that new claims for jobless benefits rose by 12,000 last week to a seasonally adjusted 352,000. Although the advance was bigger than the 9,000 forecasters had predicted, it was still well below the highs of the last few months.

Analysts said the housing report suggests builders will continue to lay foundations for at least a few more weeks.

Applications for building permits, a barometer of future activity, rose for the third straight month, up 3% to a 1.46-million annual rate.

Interest-sensitive single-family starts--80% of residential building activity--shot up 4.2% to a 1.21-million rate, highest since 1.22 million in July 1994. They had slipped 1.5% in March.

Construction of apartments and condominiums, an often volatile category not subject to interest-rate changes, surged 13% in April to a 305,000 annual rate after plunging 18.4% a month earlier.

In its productivity report, the Labor Department said output shot up at an annual rate of 3.7% in the first quarter, more than six times faster than the anemic 0.6% gain in the final three months of 1995.

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Housing Starts

Seasonally adjusted annual rate, in millions of units:

April 1996: 1.52

Source: Commerce Department