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Thursday, 26 March 2009

Signs of US revival

WASHINGTON - NEW orders for long-lasting US-made goods rose in February for the first time in seven months and new home sales rebounded, government data showed on Wednesday, suggesting the economic downturn might be easing a bit.
The Commerce Department said durable goods orders rose 3.4 per cent to US$165.6 billion (S$249 billion) in February, the biggest gain since December 2007, after a 7.3 per cent drop the prior month. Sales of newly built US single-family homes rose at their fastest pace in 10 months in February, it said in another report.

US stocks rallied on the data, with the Dow Jones industrial average ending 89.84 points higher at 7,749.81 and the S&P 500 closing up 7.76 at 813.88.

The upbeat economic reports and tepid demand in a record-large auction of five-year US Treasury notes sent benchmark government bond yields, which move inversely to prices, rising to their highest in a week.

Recent data, including retail sales and housing, have pointed to some signs of a moderation in the pace of the 15 month housing-led recession.

New durable goods orders excluding transportation rose 3.9 per cent in February, the largest gain since August 2005, the Commerce Department said. Orders for machinery soared 13.5 per cent in February, the biggest increase since March 2004.

In a separate report the Commerce Department said sales of newly built U.S. homes rose 4.7 per cent to a 337,000 annual pace, the fastest increase since last April, from 322,000 in January.

Despite the increase, February sales were the second lowest ever after the drop in January to the slowest pace in records going back to 1963, the department said. Economists, who had forecast another decline in sales, were still encouraged.

Sales of previously owned homes rose 5.1 per cent in February, while housing starts soared 22.2 per cent that month.

Stabilising the housing market, the main trigger of the current economic slump, is crucial for the economy's recovery.

The median sales price in February fell a record 18.1 per cent to US$200,900 from a year earlier, the department said.

The inventory of homes available for sale in February was at 330,000, the smallest since June 2002. The February sales pace left the supply of homes available for sale at 12.2 month's worth. -- REUTERS

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