WRAPUP 4-Upbeat U.S. data buoys growth view; housing lags

* Initial jobless claims dip by 3,000 last week

* Mid-Atlantic factory activity index rises to 24.3 in Dec

* Housing starts rise 3.9 pct in November

* Permits drop 4 pct to 1-1/2 year low
(Adds comment from IMF chief on U.S. economy, updates
markets)

By Lucia Mutikani

WASHINGTON, Dec 16 (BestGrowthStock) – The U.S. economy showed new
signs the recovery was gaining traction, with data on Thursday
that new claims for jobless aid fell last week and factory
activity in the Mid-Atlantic region grew at its quickest pace
in more than 5-1/2 years this month.

The reports added to growing evidence of a substantial
pick-up in economic growth during the fourth quarter, even
though housing data pointed to continued stress in the sector.

“The recovery is gaining some momentum. Manufacturing
output is strong, layoffs are slowing and we think GDP growth
will be somewhere between 3 and 4 percent in the fourth
quarter,” said Mark Vitner, a senior economist at Wells Fargo
Securities in Charlotte, North Carolina.

Initial claims for state unemployment benefits fell 3,000
to 420,000, the Labor Department said, in line with forecasts
and a recent downward trend. The closely watched four-week
moving average of claims dropped for a sixth straight week to a
fresh two-year low.

In a separate report, the Philadelphia Federal Reserve Bank
said its business activity index rose to 24.3, the highest
level since April 2005, from 22.5 in November. Economists had
expected a reading of 15.0. Any reading above zero indicates
expansion in the region’s manufacturing output.

The upbeat data and a bullish forecast from FedEx Corp
(FDX.N: ), the second-largest package delivery company, lifted
U.S. stocks (Read more about the stock market today. ). FedEx, however, reported quarterly earnings that
missed estimates. For details see [ID:nN16208769]

Prices for U.S. government debt ended higher, while the
dollar was little changed against the euro and fell slightly
against the yen.
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U.S. jobless claims graphic http://r.reuters.com/dyd52r

U.S. housing starts graphic http://r.reuters.com/caf52r

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But even as many latched onto signs of improvement in the
U.S. economy, the head of the International Monetary Fund on
Thursday warned of uncertainty in the world’s biggest economy.

“What’s happening in the United States is very uncertain
and will have a lot of influence on the global outcome,”
Dominique Strauss-Kahn, the IMF’s managing director, said in an
interview at a Thomson Reuters Newsmaker event.

“I don’t believe in the double-dip story, but a slowdown,
that’s the most important thing the global economy will have to
face in the coming months.” For details see [ID:nN16239727] and
[ID:nN16188008].

RECOVERY ELUDES HOUSING

In another report on Thursday, the Commerce Department said
housing starts rose 3.9 percent to an annual rate of 555,000
units in November. However, permits for future home
construction dropped to a 1-1/2-year low. [ID:nN15148854]

“The housing sector does not appear to be participating in
the recent improvement in economic activity,” said Paul Dales,
a U.S economist at Capital Economics in Toronto.

Data over the past few days covering retail sales, trade
and industrial production indicate gross domestic product
growth this quarter could easily outstrip the modest 2.5
percent rate of the July-September period.

Though growth has been largely driven by the manufacturing
sector, consumer spending is picking up as labor market
conditions improve somewhat. The major blemish in the data in
recent weeks, however, was a jump in the unemployment rate.

The Philadelphia Fed survey, which closely correlates to
the Institute for Supply Management’s report on national
manufacturing due early next month, mirrored similar gains in
a gauge of New York state factory activity released on
Wednesday.

Economists believe U.S. manufacturing is being driven by
growing export demand, which should eventually translate into
stronger job creation.

While the jobless claims data did not cover the survey week
for December’s employment report, economists said it hinted at
a larger gain in payrolls after November’s paltry 39,000 job
increase.

“The trend in claims has dropped by about 20,000 between
the November and December payroll survey weeks,” said Ian
Shepherdson, chief U.S. economist at High Frequency Economics,
in Valhalla, New York.

“Other things equal, that should mean private payrolls are
about 50,0000 stronger in December than in November. We think
the easing of credit pressures on small firms is bringing
claims down, and there are further declines ahead.”
(Additional reporting by Pedro Nicolaci da Costa in Washington
and Leah Schnurr in New York, Editing by Chizu Nomiyama and
Leslie Adler)

WRAPUP 4-Upbeat U.S. data buoys growth view; housing lags