NEW YORK (TheStreet) -- True to Federal Reserve Chair Janet Yellen's Congressional testimonies this week, it was housing data on Thursday that stumbled while other indicators revealed resiliency in the U.S. economy.
Housing starts for June dropped to 893,000 from 985,000 the prior month and well below consensus expectations of about 1.03 million.
"Housing is not catching hold of a rebound," FAO Economics chief economist Robert Brusca wrote in a note to clients on Thursday.
Yellen said Tuesday to the Senate Banking Committee that the housing sector has shown little recent progress and that activity leveled off following last year's increase in mortgage rates.Of course, that mortgage rate hike last year was the direct result of then-Chairman Ben Bernanke's comments that the Fed was considering a plan to scale back and end its economic stimulus program. Banks hiked mortgage rates in response as a preemptive anticipation that the Fed would also raise interest rates. It hasn't yet. Beyond housing, which Yellen said isn't dragging enough to cause a turnaround in overall economic growth, jobless claims for the week ended July 12 dropped to 302,000 from 305,000 and slipped well below economists' expectations. The dip also brought the four-week moving average down to 309,000 claims, which, coupled with five straight months of more than 200,000 jobs added to the U.S. economy, signaled continued strength in the labor market. "[T]he improvements seen thus far have not translated into wage pressures, a presumed, unofficial prerequisite for the Fed to initiate rate increases," Sterne Agee chief economist Lindsey Piegza wrote in an investor note. Lending support to the stronger-than-expected jobless claims was the Philadelphia Fed Survey's pop in business conditions for July. The general business conditions index jumped to 23.9 from 17.8 the prior month and well above economists' forecast of 16.9. The Philadelphia Fed Survey was strong enough to lift markets from negative territory to the flatline. -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux