Housing starts decline; manufacturing stagnates
Groundbreaking on new homes slid to the slowest pace in more than 10 years in the United States during July, and factory activity in the mid-Atlantic region stagnated in August, government reports showed Thursday.
In another sign of a slowdown, the number of U.S. workers seeking jobless benefits rose in the latest week, although the weekly figure is prone to fluctuations.
Housing starts followed the longer-term trend of the declining housing sector and came in even worse than expected, falling 6.1% in July. Building permit activity, a sign of future construction plans, also sank.
The Philadelphia Federal Reserve Bank said its business activity index was at zero in August, showing no growth, versus 9.2 in July.
A reading above zero indicates growth in the region’s manufacturing sector. Economists polled by Reuters had forecast a reading of 9.0.
“The economy is still cooling off a bit. It doesn’t signal a decline in activity, but the better numbers we saw in spring are not continuing into the third quarter,” said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis.
A Commerce Department report said housing starts set an annual pace of 1.381 million units in July, lower than Wall Street forecasts of 1.405 million units and the upwardly revised 1.470 million for June. It was the lowest pace since January 1997.
Building permits fell 2.8% in July to an annual pace of 1.373 million, their lowest since October 1996 when they reached 1.358 million. Economists polled by Reuters expected July permits at 1.40 million after 1.413 million in June.
July’s drop in housing starts was the worst in the South, where they fell 11%. Starts also fell in the West and in the Northeast but rose in the Midwest.
Compared with a year earlier, July home starts were off 20.9% and permits were down 22.6%.
The number of U.S. workers signing up for jobless benefits rose to 322,000 last week. It was the highest level in two months but still pointed to a steady job market, Labor Department data showed Thursday.
Economists were expecting the weekly claims level to inch down to a seasonally adjusted 313,000 for the week ended Saturday, from 316,000 reported the previous week. Fluctuations are common in this weekly data, particularly in the summer. A Labor Department official said there were no special factors linked to the latest increase.
Robert Brusca, chief economist at Fact & Opinion Economics in New York, said the numbers were not worrisome.
“Right now I would say this number doesn’t mean anything. But it is an upswing, and you watch to keep an eye on that,” Brusca said.
The four-week moving average, considered a better measure of employment conditions because it irons out the weekly gyrations, edged up to 312,500 from 307,750.
