Housing and jobless data signal a fragile recovery

Adding to evidence that the recession has ended, housing construction rose in August and fewer laid-off workers sought jobless aid last week.

Still, the reports suggest a slow and fragile economic recovery.

The rise in housing starts was solely because of a jump in the volatile apartment-building category, and unemployment claims remain far above levels associated with a healthy economy.

And even as the housing industry begins to recover from its worst downturn in decades, a glut of unsold homes and record levels of home foreclosures are weighing on the industry.

Construction of single-family homes and apartments rose 1.5 percent to an annual rate of 598,000 units, the highest level since November, the Commerce Department said. That was slightly lower than the 600,000-unit pace that economists had expected.

And it remains more than 70 percent below the peak rate hit in 2006.

Applications for building permits, a gauge of future activity, rose 2.7 percent in August to an annual rate of 579,000 units, slightly below the 580,000 level that had been forecast. But for single-family homes, permits dipped 0.2 percent. They rose 15.8 percent for multifamily units.

Initial claims for unemployment benefits dropped last week to a seasonally adjusted 545,000 from 557,000 the previous week, the Labor Department said. Wall Street economists had expected a small rise.

The decline was the third in the past four weeks. The four-week average, which smooths out fluctuations, dropped to 563,000. Despite the improvement, that's far above the 325,000 per week that is typical in a healthy economy.