Indicators Suggest U.S. Economic Recovery is Accelerating

The New York Times

17 November 2011

The number of people applying for unemployment benefits fell last week to the lowest level since early April, a sign that layoffs were easing and that hiring might pick up.

The New York Times


The New York Times


Separately, a Commerce Department report said that builders started slightly fewer homes in October but submitted plans for a wave of apartments, a mixed sign for the struggling housing market.

Weekly applications for jobless benefits dropped by 5,000 to a seasonally adjusted 388,000, the Labor Department said Thursday. It was the fourth decline in five weeks.

The four-week average, a less volatile measure, dropped to 396,750. That is the first time the average been below 400,000 in seven months.

Applications need to consistently drop below 375,000 to signal sustained job gains. They have not fallen that low since February.

The job market “is still weak but there are hopeful signs of some modest improvement,” Steven A. Wood, an economist at Insight Economics, said in a note to clients.

The number of people receiving benefits also fell to the lowest level since September 2008, when Lehman Brothers collapsed and the financial crisis intensified.

The benefit rolls fell 57,000 to 3.6 million in the week ended Nov. 5. That is one week behind the applications data. The figure is the lowest since Sept. 20, 2008.

That does not include about three million additional people receiving extended benefits from emergency programs put in place during the recession. All told, 6.8 million people received benefits during the week ended Oct. 29, the latest data available.

A rebound in manufacturing could lead to more hiring. Factory output grew in October for the fourth straight month, the Federal Reserve said Wednesday. Production of trucks, electronics and business equipment all rose.

Another report on Thursday from the Commerce Department showed that home builders broke ground on a seasonally adjusted annual rate of 628,000 homes last month. That is roughly half the 1.2 million that economists equate with a healthy housing market.

But building permits, a gauge of future construction, rose nearly 11 percent. The increase was spurred by a 30 percent increase in apartment permits, which reached its highest level in three years.

Over the last year, apartment permits have surged roughly 63 percent. Permits for single-family homes have increased just 6.6 percent in that span.

Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. The surge in apartment construction may help increase economic growth, but it has not been enough to offset the steep declines in single-family homebuilding.

Construction starts of single-family homes, which make up about 70 percent of residential home construction, rose nearly 4 percent last month. Starts for apartments, a more volatile category, fell more than 13 percent.

Over all, homebuilding dipped in 2009 to just 554,000 homes, the lowest levels in 50 years. Last year the figure rose to roughly 587,000 homes and this year may not be much better.

Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

After previous recessions, housing accounted for at least 15 percent of economic growth in the United States. Since the recession officially ended in June 2009, it has contributed just 4 percent.