The number of new claims for jobless benefits unexpectedly fell last week to the lowest level in more than five months, a sign the US economy may be pulling out of recession.
"The worst of the layoffs and the labor market weakness is behind us," said Tim McGee, chief strategist at UFJ Bank in New York. "There was an overreaction after Sept. 11, and businesses need to start going in the other direction."
Initial jobless claims decreased by 14,000 in the week that ended Saturday to 384,000, the Labor Department said. Applications haven't been as low since the last week of July. Separate reports showed construction began on single-family homes in December at the fastest pace in eight months and Philadelphia-area manufacturing grew for the first time since November 2000.
Many factories have carried out job cuts announced in 2001 and expect production to rise. Delphi Automotive Systems Corp, which makes parts for General Motors Corp and other automakers, reported that it has already eliminated 10,100 of the 11,500 jobs it intended to slash.
"If you talk to car dealers around the country, they want product," Delphi's chief executive officer, J.T. Battenberg III, said in an interview.
Housing starts fell 3.4 percent last month to 1.57 million units begun at an annual rate, the Commerce Department reported.
The decline occurred as builders undertook construction of fewer apartments and other multifamily projects. Work on single-family houses increased 3.6 percent. A total of 1.603 million homes were started last year, compared with 1.569 million in 2000. Only in 1998 and 1999 did builders start more homes in the last 14 years.
An unemployment rate that climbed to a 6.5-year high of 5.8 percent in December and may peak at 6.2 percent this year has yet to erode consumer optimism.
The University of Michigan's index of consumer sentiment climbed to 88.8 in December, the highest since before the Sept. 11 terrorist attacks.
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