WASHINGTON: US homebuilding jumped in February as unseasonably warm weather boosted the construction of single-family houses to near a 9-1/2-year high, suggesting the economy remained on solid ground despite an apparent slowdown in the first quarter.
The economy’s fundamentals were further strengthened by other data on Thursday showing a drop in the number of Americans filing for unemployment benefits last week amid a tightening labour market. Though factory activity in the mid-Atlantic region cooled this month, manufacturers reported growth in new orders and difficulties finding qualified workers.
The data came a day after the Federal Reserve raised interest rates for the third time since the 2008 financial crisis. Fed Chair Janet Yellen told reporters that the US central bank was sending a message that “we have confidence in the robustness of the economy and its resilience to shocks.”
Housing starts increased 3.0 per cent to a seasonally adjusted annualised rate of 1.29 million units last month, the Commerce Department said. Homebuilding was up 6.2 per cent compared to February 2016, suggesting housing would contribute to growth this year. Single-family homebuilding, which accounts for the largest share of the residential housing market, surged 6.5 per cent to a 872,000-unit pace, the highest level since October 2007.
Starts for the volatile multi-family housing segment fell 3.7 per cent to a 416,000-unit pace. A robust labour market is supporting the housing market, helping it to buck weakness in other parts of the economy. Further gains in single-family construction are likely as building permits increased 3.1 per cent last month. A survey on Wednesday showed homebuilders’ confidence jumped in March to its highest level since June 2005.
In a separate report on Thursday, the Labour Department said initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 241,000 for the week ended March 11.
It was the 106th straight week that claims remained below 300,000, a threshold associated with a healthy labour market. That is the longest stretch since 1970, when the labour market was much smaller. The labour market is near full employment, with job growth averaging 209,000 per month over the past three months, and the unemployment rate is at 4.7 per cent, close to the nine-year low of 4.6 per cent hit last November.
A third report from the Philadelphia Fed showed its manufacturing activity index fell to a reading of 32.8 this month from 43.3 in February. However, the survey’s new orders gauge hit its highest level since December 1987. — Reuters
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