Jobless claims dipped for a second week, suggesting growth in the labor market, but data on home construction showed that sector remains stressed even as the economy shows signs of a pick up.

Initial claims fell 3,000 to a seasonally adjusted 420,000, the Labor Department said on Thursday, in line with forecasts. The four-week moving average of claims, considered a better measure of labor market trends, touched a fresh two-year low.

A separate report from the Commerce Department showed housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units. However, permits for future home construction dropped to a 1-1/2 year low.

Economist welcomed the second week of decline in initial claims and said it bode well for employment growth, but still remained insufficient to bring down a 9.8 percent unemployment rate.

This confirms the downtrend we have enjoyed in the past month, which is consistent with a six-figure monthly increase in payrolls going forward, said Richard DeKaser, an economist at The Parthenon Group in Boston.

U.S. stock index futures held onto slight gains after the data. Sentiment was also supported by FedEx Corp , the second-largest package delivery company, which reported a quarterly profit and revenue that missed Wall Street estimates, but raised its full-year outlook on stronger-than-expected holiday volume and an improved economic forecast.

U.S. Treasury prices maintained their slight gains, while the dollar fell against the euro and the yen.

October's housing starts were revised up to a 534,000-unit pace from the previously reported 1-1/2 year low rate of 519,000 units. Analysts polled by Reuters had expected November housing starts to rise to a 550,000-unit rate.

Despite last month's pick-up in residential construction, housing remains weak as high unemployment weighs on demand and homeowners' ability to hang on to their properties, lagging an acceleration in broader economic activity.

A survey on Wednesday showed sentiment among home builders was mired at record low levels this month, suggesting residential construction will again be a drag on gross domestic product growth in the fourth quarter.

New building permits fell 4.0 percent to a 530,000-unit pace last month, the lowest since April 2009, after a 0.9 percent increase in October. Permits were dragged down by a 23 percent plunge in the volatile multi-family segment. Permits for single-family homes rose 3 percent last month.

Analysts had expected overall building permits to rise to a 560,000-unit pace in November.

Groundbreaking last month was lifted by a 6.9 percent rise in single-family home construction. Starts for the multi-family segment, however, fell 9.1 percent. New home completions tumbled 14.1 percent to a record low 513,000 units in November.

(Reporting by Lucia Mutikani; Additional reporting by Pedro Nicolaci da Costa in Washington and Richard Leong in New York; Editing by Andrea Ricci)

Unemployment Fall