Thursday’s U.S. economic data weighed in the negative side with a drop in U.S. housing starts and high jobless claims.

U.S. housing starts unexpectedly dropped 2.2% in August to an annual rate of 1.61 million units. Expectations were for a slight increase in starts. “The August decline marked the third consecutive monthly drop and takes starts below the average 1.64 million over the past 12 months,” notes BMO Nesbitt Burns. Building permits also disappointed, down 2.5%.

“Despite the decline, August’s rate still exceeds the number of homes started in 2001. This is hardly a sign of weakness and housing remains one of the strongest sectors of the U.S. economy,” says BMO. “However, a third consecutive decline in starts suggests that housing is bouncing along at a high plateau with little further upside potential. Interest rates are very supportive, but the industry is pushing against the ceiling.”

Also, U.S. jobless claims remained high last week. “Claims fell from an upwardly revised figure last week, however, at 424,000 they continue to point to an anemic labour market south of the border,” notes RBC Financial Group’s economists. “The fundamental question remains: as consumer’s contribution to the economy begins to taper off, will U.S. business spending be there to move the recovery forward.”