US consumer and jobs data fuel economic recovery hopes
US consumer spending and home sales rose more than expected in October, while new claims for jobless benefits fell sharply last week, suggesting the economic recovery was gaining traction.
A surprise decline in orders for long-lasting US-made goods and a second straight monthly drop in consumer confidence, however, offered a reminder that the recovery from the most brutal recession in 70 years would be gradual. The economy resumed growth in the third quarter, helped by government programmes such as a popular $8,000 (£4,800) tax credit for first-time home buyers, which continues to prop up sales.
The Commerce Department yesterday said consumer spending, which normally accounts for over two-thirds of US economic activity, increased 0.7 per cent last month after falling 0.6 per cent in September. Economists had expected a gain of 0.5 per cent.
Separately, the Labor Department reported that initial claims for state unemployment benefits slid to 466,000 last week, the lowest in more than a year, from 501,000 the prior week. It was the fourth straight weekly decline. Another Commerce Department report showed sales of newly built US single-family homes surged 6.2 per cent to a one-year high last month.