Latest US data batch mostly positive

Wednesday 25 November 2009 15.53
US car sales - Rebound after scrappage scheme ended
US car sales - Rebound after scrappage scheme ended

New figures show that US consumer spending jumped 0.7% in October, helped by a rebound in car sales. While other figures provided brighter news from the labour market and the housing sector, durable goods orders unexpectedly fell.

The Commerce Department said the surge in household spending, a key driver of economic activity, rebounded from a a 0.6% in September.

The report highlighted volatility from the car scrappage scheme which boosted car sales until its expiry in August. This resulted in a sharp fall in consumer spending in September, followed by October's rebound.

The data also showed that personal incomes grew 0.2%. Because of falling prices, this meant a 0.4% rise in real, or inflation-adjusted disposable income, the report showed.

The report offers a snapshot on the financial health and spending patterns of US consumers, seen as critical to a sustainable recovery from the worst recession in decades. Spending had increased four consecutive months before the fall in September. The October data showed the savings rate fell slightly to 4.4% from 4.6% a month earlier.

Separate figures show that new orders for long-lasting manufactured goods fell unexpectedly in October.

The Commerce Department said durable goods orders dropped 0.6% after rising by an upwardly revised 2% in September. New orders in September were previously reported to have increased 1.4%. Analysts had expected an increase in October.

Durable goods orders are a leading indicator of manufacturing activity, which in turn provides a good measure for overall business health.

Meanwhile, initial claims for US jobless insurance benefits plunged to their lowest level since September last year, according to figures showing an improvement in the troubled labour market.

The seasonally adjusted number of new unemployment claims in the week ending November 21 decreased by 35,000 to 466,000 from the previous week's revised figure of 501,000, the Labor Department said. It was much lower than the 500,000 expected by analysts and is the first time the four-week moving average has dipped below the half-million level since 2008.

Other figures showed that US new home sales rebounded more than expected in October to their strongest pace in more than a year.

The Commerce Department reported that sales of new one-family homes rose to a seasonally adjusted annual rate of 430,000, or by 6.2%, from September's revised 405,000 rate. Most analysts had forecast October sales of 404,000 new homes. It was the first rise in two months, after declines of 2.4% in September and 1% in August.