Corrected: Instant view: Jobless claims stuck at 420,000

(Corrects spelling of Parthenon Group in 19th paragraph)

NEW YORK (BestGrowthStock) – First-time claims for U.S. jobless benefits were essentially unchanged in the latest week, cementing a recent downward trend that remains too modest to bring down unemployment.

U.S. housing starts rose slightly more than expected in November, but a surprise drop in permits for future home construction to a 1-1/2 year low indicated continued weakness in the housing market even as the economic recovery gains traction.

KEY POINTS: * Initial claims dipped slightly to 420,000 in the week ended December 11, matching the median forecast in a Reuters poll of economists, from a revised 423,000 in the prior week. * However, continuing claims, which exclude the millions of Americans relying on extended benefits, rose to 4.14 million in the week ended December 4. * That was far higher than the reading of 4.07 million analysts had expected, and the prior week’s figure was also revised up considerably. * The Commerce Department said on Thursday housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units. * October’s starts were revised up to a 534,000-unit pace from the previously reported 1-1/2 year low rate of 519,000 units. * Analysts polled by Reuters had expected housing starts to rise to a 550,000-unit rate.

COMMENTS:

IAN LYNGEN, SENIOR GOVERNMENT BOND STRATEGIST, CRT CAPITAL

GROUP, STAMFORD, CONNECTICUT:

“A relatively upbeat round of data to start the session, the initial jobless claims dropped 3,000 to 420,000 for the lowest read since mid-November and the second lowest since mid-2008 — an impressive showing but notably inconsistent with the recent uptick in the unemployment rate.”

NICHOLAS TENEV, U.S. ECONOMIST, BARCLAYS CAPITAL, NEW YORK:

JOBLESS CLAIMS: “This is an encouraging report, which signals that despite a soft November employment report, the rate of job losses is continuing to slow.”

FRED DICKSON, CHIEF MARKET STRATEGIST, THE DAVIDSON COS., LAKE

OSWEGO, OREGON:

HOUSING STARTS: “It’s basically more of the same. I didn’t expect much market reaction. Housing starts are up, a little bit of a bump up, but still low. It’s more of the same. We’re talking November; it’s normally a weak month for housing.

JOBLESS CLAIMS: “I think the continuation of a drop in initial jobless claims might suggest some easing in unemployment rate, but not much. We’ve got a long ways to go.”

RICHARD DEKASER, ECONOMIST, THE PARTHENON GROUP, BOSTON:

JOBLESS CLAIMS: “This confirms the downtrend we have enjoyed in the past month, which is consistent with a six-figure monthly increase in payrolls going forward. The improvement is very welcomed and encouraging, but it’s insufficient to substantially bring down the high jobless rate. We need to see the four-week average to go below 400,000 for bigger job growth.”

HOUSING STARTS: “The November figure is finally giving us a clean reading in the post-tax-incentive environment. Moving ahead, we should not see further decline, but rather more bumping along the bottom.

“Higher mortgage rates will hurt housing demand. We were at the most affordable period in housing in history just two months ago. But if credit availability increases, for example, that could blunt the effect of higher rates.”

MARKET REACTION: STOCKS: U.S. stock index futures hold onto slight gains. BONDS: U.S. Treasury bond prices maintain slight gains. FOREX: The dollar holds losses against the euro and the yen

Corrected: Instant view: Jobless claims stuck at 420,000