(Adds details, background, updates markets)
* Jobless claims fell 36,000 last week
* Continuing claims lowest since 2007
* Housing starts down 14.4 percent, prior month revised up
By Lucia Mutikani
WASHINGTON, Sept 18 (Reuters) - The number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting a sharp slowdown in job growth in August was an aberration.
While other data on Thursday showed some weakness in home building and factory activity, the underlying trend remained supportive of solid economic growth in the third quarter.
“We have broad-based growth in the economy, including the housing market,” said Gus Faucher, senior economist at PNC Financial Services Group
Initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 280,000 for the week ended Sept. 13, the lowest level since July, the Labor Department said.
Economists had forecast claims falling to only 305,000. The data came a day after the Federal Reserve renewed a pledge to keep interest rates near zero for a “considerable time,” while hinting at a faster pace of rate hikes than the U.S. central bank was signaling a few months ago.
“This is consistent with that the Federal Reserve is expecting to see,” Faucher said of the data.
In a separate report, the Commerce Department said housing starts fell 14.4 percent to a seasonally adjusted 956,000-unit annual pace last month. But July’s starts were revised to show a 1.12-million unit rate, the highest level since November 2007.
Construction permits also fell, but that too followed a sizable gain in July, and the decline in both starts and permits were centered in the volatile multi-family homes segment.
In a bright spot, starts on single-family homes in the South, where about half of U.S. single-family construction takes place, rose to an eight-month high, while permits in the region touched their highest level since April 2008.
The jobless claims data helped pushed the dollar to a more than six-year high against the yen, while U.S. Treasury prices fell. U.S. stocks were trading higher, with the S&P 500 brushing against resistance at a record peak. The housing index underperformed the broad market as Pulte Group and DR Horton slipped.
The housing sector is clawing back after suffering a setback from a spike in mortgage rates last year, but it remains constrained by relatively high unemployment and stringent lending practices by financial institutions.
With the labor market gaining traction, however, economists expect an acceleration in housing activity.
“The underlying momentum in the housing sector remains quite favorable and we expect building activity to rebound next month,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
In another report, the Philadelphia Federal Reserve Bank said its index of mid-Atlantic business activity slipped in September.
Despite the drop, factory employment in the region hit its highest level since May 2011 and new orders accelerated, showing underlying strength in one of the major pillars of the economy.
The jobless claims data covered the period during which employers were surveyed by the government for its tally of non-farm payroll employment.
Claims fell 19,000 between the August and September survey periods, suggesting a rebound in job growth from August’s eight-month low.
The number of people still receiving benefits after an initial week of aid fell 63,000 to 2.43 million in the week ended Sept. 6. That was the lowest level since May 2007.
The unemployment rate for people receiving jobless aid fell to 1.8 percent, the lowest level since November 2006, from 1.9 percent in the prior week. That, together with the shrinking jobless rolls, indicated more people are finding work. (Reporting by Lucia Mutikani; Additional reporting by Ryan Vlastelica in New York; Editing by Tim Ahmann and Paul Simao)