Signs of strengthening US economy

US housing construction rose last month to the highest since January and the number of people continuing to collect jobless benefits fell to the lowest in two months, signs the economy is beginning to strengthen.

Mortgage rates fell to the lowest on record in June, causing applications for home purchases to approach an all-time high.

The reports underscore Federal Reserve chairman Alan Greenspan’s message to Congress this week that “statistic by statistic,” economic data are coming in “somewhat better than what we expect”.

“I’m encouraged by how well the consumer is holding up,” said Peter Hooper, chief economist at Deutsche Bank Securities in New York.

The US recession that started in March 2001 ended eight months later, the National Bureau of Economic Research said, making it shorter than the average slump.

The Cambridge, Massachusetts-based committee is the accepted arbiter of when business cycles start and end. The economy is forecast to grow at a 3.7% rate by the fourth quarter, according to the median estimate in a Bloomberg News survey.

“Household spending was clearly the key, keeping the recession mild,” said James O’Sullivan, an economist at UBS Securities LLC in Stamford, Connecticut.

“Housing and auto sales stayed strong throughout the recession,” he said, thanks to Fed rate cuts and the timing of the 2001 tax cuts. The Labour Department said continuing claims in the week ended July 5 were the lowest since 3.643 million at the end of April. Initial jobless claims fell last week by 29,000 to 412,000.

Economists said claims this month may be difficult to interpret because auto-makers close plants in July to retool for new models.

All US and Canadian plants at Ford Motor Co, the world’s No 2 auto-maker, were scheduled to be idle last week for an annual two-week summer shutdown.