Amid today’s economic doom and gloom, U.S. housing data and jobless claims shone a ray of hope.

U.S. housing starts jumped 2.8% in July to 1.67 million units. This amounts to an annualized 5% increase over the average for the past 12 months. Both multi-family units and single-unit starts rose in the month.

“The real estate market looks like it is in decent shape, echoing yesterday’s release showing a 6 point rise in the National Homebuilders’ Index to 62,” says BMO Nesbitt Burns. “The decline in borrowing costs should continue to provide support going forward.”

Building permits were disappointing, dropping for the second month in a row, but still 1.6% above year ago levels. “The housing data tend to be volatile, but looking at the series on a smoothed 12-month average basis, the year-over-year trend has been clearly improving,” BMO notes.

On the job front, initial claims fell 8,000 in the latest week to 380,000, while the four-week moving average dipped to 370,750, the lowest level since March.

CIBC World Markets observes, “Market reaction was mixed to this morning’s data. Better-than-expected inflation news helped boost the long end, while an unexpected improvement in both housing starts and initial jobless claims weighed slightly on the short end of the curve.”

BMO concludes, “We expect the U.S. housing sector to continue to hold up fairly well as the rest of the economy slows. Still, there is nothing in this report to stop another rate cut at next Tuesday’s FOMC meeting.”