Housing Starts Slow, Labor Market Remains Healthy

- Housing Starts for December fell to 1933K versus estimates of 2035K and 2121K in November.
- Building Permits for December fell to 2068K versus estimates of 2100K and 2163K in November.
- Initial Jobless Claims for last week fell to 271K versus estimates of 315K and 307K the prior week.
- Continuing Claims are estimated to fall to 2534K versus estimates of 2686K and 2692K prior.

BOTTOM LINE: US housing starts fell to a nine-month low in December as rising interest rates and prices make buying less affordable and builders pull back after the second-best year in history, Bloomberg reported. Starts declined 24% in the Midwest, 22% in the West and 14% in the Northeast. Starts rose 5.2% in the South. It is a positive that housing starts are slowing as sales slow. This should help ensure the market slows to a healthy sustainable level.

The number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week to the lowest since April 2000, evidence that companies are holding on to workers to meet demand, Bloomberg reported. The four-week moving average of initial claims fell to 299,000, the lowest since October 2000. The unemployment rate among people eligible for benefits, which tracks the US unemployment rate, fell to 2% versus 2.1% the prior week. I continue to believe the labor market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.