Economists and traders alike were surprised to learn Thursday that U.S. initial jobless claims rose by 2,000 last week to 418,000.

“With special factors relating to the extension of benefits dropping out, initial claims should drop if the economy is improving,” says RBC. “The steady result shows that the pace of hiring remains sluggish. At the same time, the number of continuing claims hit its highest since February 1983.”

Also on Thursday, it was announced that U.S. housing starts fell in April for a second month.

The reports suggest that that the recovery may be slow in the U.S.

April housing starts in the U.S. slipped 5.4% to 1.56 million units. “That was weaker than the expected 1.63 million and below the average 1.62 million over the past twelve months,” says BMO Nesbitt Burns. “Still, the back-to-back monthly declines are understandable, given that they came from unsustainably high winter levels.”

RBC Financial Group economists note that March’s numbers were revised to show an 8.1% decline from the initial 7.8% drop. “At the same time, building permits were basically unchanged with a small 0.3% rise, pointing to further homebuilding weakness in May and June. With mortgage rates up in anticipation of looming Fed rate hikes, activity in the housing market is ebbing, and more weakness is ahead as rising rates, weak markets, the sluggish pace of recovery and the still-high jobless numbers sap the willingness of consumers to make large purchases. The exception, healthy April auto sales, was driven by automakers’ incentives, which are of course not available to artificially prop up the housing market.”

BMO is more positive, noting, “The U.S. housing sector remains in pretty good shape, despite the monthly wiggles. High affordability and improving consumer confidence should continue to support construction activity for the remainder of the year.”


RBC says that Thursday’s weaker-than-expected releases, “give the Fed more reasons to hold off on beginning the tightening of monetary policy.”