Mixed signs about US economy recovery

December 24th, 2009 - 1:52 pm ICT by IANS  

Washington, Dec 24 (IANS) Americans have been spending more for the last two months as their personal income rose the
most in six months, but a surprise drop in new home sales to a seven-month low sent mixed signals about US economic recovery.

The Commerce Department said Wednesday income climbed by 0.4 percent, or $49.7 billion, during November, after an upwardly revised 0.3 percent rise in October. That was the biggest gain since May, when it rose 1.5 percent.

Spending climbed 0.5 percent, or $47.9 billion, last month after increasing 0.6 percent in October. Analysts had expected consumer spending, which normally accounts for more than two-thirds of US economic activity, to rise 0.6 percent.

Personal savings totalled $521.1 billion in November, or 4.7 percent of disposable income, compared to $516.7 billion in October.

The report came one day after the government said that gross domestic product, the broadest measure of economic activity, grew 2.2 percent in the third quarter.

A separate report from the department showed sales of newly built single homes unexpectedly plunged in November.

The seasonally adjusted annual rate of new home sales plummeted 11.3 percent to 355,000 in November compared to the prior month, a Census Bureau report said.

The November rate was the lowest since April, when new homes sold at an annualised rate of 345,000.

Sales of new construction were expected to edge up to an annualised rate of 438,000 for the month of November, according to a consensus of economists surveyed by Briefing.com.

But that estimate was based on the initial report for October, which showed an annual sales rate of 430,000. On Wednesday, the Census Bureau revised the October rate down to 400,000.

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