In the week ending the 12th of January, US initial jobless claims dropped sharply to reach their lowest level since early 2008. Initial jobless claims fell from an upwardly revised 372 000 to 335 000, while the consensus was looking for a marginal drop to 369 000. The less volatile four-week moving average dropped from 366 000 to 359 250. Although we had expected that the volatility in claims would start to ease, the labour department added that the drop may reflect the difficulty the government has in adjusting the data after the holidays. Therefore, we are cautious to draw conclusions from the data as they might still be distorted by the seasonal factors. In the coming weeks however, we hope that the volatility in the data will diminish, which should give us again a more reliable indication on the state of the US labour market. Continuing claims, which are reported with an extra week lag, rose sharply in the week ending the 5th of January. Continuing claims rose from a multi-year of 3 127 000 to 3 214 000, indicating that also continuing claims are subject to high volatility.
In December, US housing starts made an impressive rebound. Housing starts rose by 12.1% M/M to a new cyclical high and the highest level since June 2008. Housing starts rose to 954 000 in December, after falling 4.3% M/M in November. The breakdown shows that strength was led by multi-family starts (20.3% M/M), while also single-family ones (8.1% M/M) increased significantly. Regional data show that the rebound was broad-based. Building permits rose slightly in December, increasing by 0.3% M/M to 903 000, close to the consensus estimate of 905 000. Also building permits remain at multi-year highs. The breakdown shows a mixed picture as single-family permits rose by 1.8% M/M, while multi-family ones fell by 2.1% M/M. Housing under construction rose by 3.2% M/M to 547 000 and housing completed increased 1.6% M/M to 686 000. The housing market could have been boosted by the unusually warm winter weather in December. Housing starts and building permits show strong month on month volatility, but the underlying trend remains encouraging and will probably continue to improve this year.