Home Sales May Point to Early U.S. Recovery
The trickle of economic reports this week is expected to show that sales of new homes are rising as consumers grow more confident, job cuts are slowing and the worst for manufacturing is over. Or in other words, there should be signs the U.S. economy is set to recover early next year from its first recession in a decade.
“The economy is coming back,” said Tim McGee, chief economist at Tokai Bank Ltd. in New York.
New homes probably sold at an annual pace of 885,000 houses in November, the fastest since June, compared with 880,000 a month earlier, Commerce Department figures are likely to show in a report Friday.
Also on Friday, the Conference Board’s consumer confidence index is expected to rise to 83.0 for December from 82.2.
And jobless claims probably totaled 400,000 last week, the third straight week at or below that level, which hasn’t happened since August.
The reports are expected to show the economic recession that began in March will be short-lived. General Motors Corp. is planning to increase production in next year’s first quarter. Americans also have become more confident about the economy 31/2 months after the Sept. 11 terrorist attacks.
No-interest loans have lured consumers to auto showrooms, leading to a record month for auto sales in October and the fifth-best month on record in November.
Such demand may be contributing to improving business at Chicago-area factories.
An index of manufacturing in the Chicago area is expected to rise to 45.0 in December, up from 41.1 in November. A reading below 50 still signals contraction, and the index has been below that level every month since October 2000. The National Assn. of Purchasing Management-Chicago will release the report Friday.
Also on Friday, the Commerce Department probably will report that orders for durable goods fell 5.5% in November. The decline would do little to wipe out the 12.7% increase the month before. That was the largest increase in at least nine years of comparable records and was led by a surge in orders for defense equipment.
Even with the expected November decline, the value of durable-goods orders would stand at $175.5 billion for the month, better than in September and close to the $180.5 billion in August. The report is scheduled for release Friday.
In another Friday report, existing homes are forecast to have sold at an annual rate of 5.13 million houses in November, enough to keep the industry on track for its second-best year, according to the National Assn. of Realtors.
