New signs of emerging strength in the housing and manufacturing sectors Tuesday showed that the U.S. economy is continuing to pull out of recession. Home construction in July had its best showing in 10 months, while pending home sales surged to the highest level in more than two years. And the manufacturing sector grew in August after sliding for 18 straight months.
The Commerce Department said Tuesday that construction spending dipped 0.2 percent in July, worse than the flat reading that economists had expected. The decline followed a small 0.1 percent rise in June.
But construction of homes and apartments rose by 2.3 percent. It was the best showing since last September and further evidence that the nation's long housing slump may finally be bottoming out.
Pending U.S. home sales rose more than expected in July to the highest level in more than two years as first-time buyers rushed to take advantage of a tax credit that expires this fall.
The National Association of Realtors says its seasonally adjusted index of sales contracts signed in July for previously occupied homes rose 3.2 percent to 97.6. It was the sixth straight increase and 12 percent above the same month last year.
Economists surveyed by Thomson Reuters expected the index would edge up to 96.5.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of how sales completed this month and next will turn out.
Manufacturing Index Points To Expansion
In another sign of economic strength, the manufacturing sector grew in August after shrinking for 18 straight months.
The Institute for Supply Management, a trade group of purchasing executives, says its manufacturing index rose to 52.9 in August, from 48.9 in July.
It's the first reading above 50, which indicates expansion, since January 2008. It's also the highest since June 2007.
Analysts polled by Thomson Reuters expected a reading of 50.5.
The index, which includes new orders, production, employment, inventories, prices and more, is based on a survey of the Tempe, Ariz.-based group's members.
President Obama called the manufacturing report "good news" and a sign "that we're on the path to economic recovery."
"There's no doubt that we have a long way to go," he said, noting that the job market continues to struggle. "But this is another important sign that we're heading in the right direction, and that the steps we've taken to bring our economy back from the brink are working."
From NPR staff and wire reports
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