New U.S. claims for jobless aid fell last week and factory activity in the country's Mid-Atlantic region grew at its quickest pace in more than 5-1/2 years this month, indicating the economic recovery is gaining traction.

Thursday's data added to views that growth in the fourth quarter could accelerate to a 3.5 percent rate from the 2.5 percent pace in prior period, even though a housing report pointed to continued stress in the sector.

Data so far on balance supports the notion we're probably close to the 3-1/2 percent real growth in the U.S. in the final quarter of this year and may be continuing into the early part of next year, said Michael Strauss, chief economist of Commonfund, in Wilton, Connecticut. Today's numbers, while they are minor numbers, continue to support some of that.

Initial claims for state unemployment aid fell by 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, dropped for a sixth straight week to a two-year low.

In a separate report, the Philadelphia Federal Reserve Bank said its business activity index rose to 24.3, the highest level since April 2005, from 22.5 in November and well above economists' expectations for 15.0. Any reading above zero indicates expansion in the region's manufacturing.

Stocks on Wall Street were little changed as indexes struggled to break through a technical range. FedEx Corp , the second-largest package delivery company, reported quarterly earnings that missed estimates, but raised its full-year outlook on stronger-than-expected holiday volume and an improved economic forecast.

Prices for U.S. government debt were down, while the dollar rose against the euro.

In another report, the Commerce Department said housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units in November. However, permits for future home construction dropped to a 1-1/2-year low.

The U.S. housing sector does not appear to be participating in the recent improvement in economic activity, said Paul Dales, a U.S. economist at Capital Economics in Toronto.

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. The fall reflected 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.

(Additional reporting by Pedro Nicolaci da Costa in Washington and Leah Schnurr in New York; Editing by Andrea Ricci and Leslie Adler)

Unemployment Fall Manufacturing