Positive Economic Indicators Help Quell Fears of Double-Dip RecessionBy Reuters | Print
A rebound in previously-owned home sales, a drop in new claims for unemployment and strong retail sales last month helped quell fears this week that the economy might dip again into recession.
(Reuters) - Pending sales of previously owned U.S. homes rebounded unexpectedly in July and new claims for jobless benefits fell last week, helping quell fears the economy could face a double-dip recession.
The data released on Thursday, including sturdy sales from U.S. retailers last month, followed a report on Wednesday showing a surprising gain in manufacturing and suggested the economy retained some underlying strength.
"This is an economy that has hit a soft patch. It's not an economy that appears to be heading toward a double-dip recession," said Brian Levitt, an economist at OppenheimerFunds in New York.
Investors appeared to agree that fears of a double-dip recession might have been overdone as they sold U.S. government debt for a second straight day and bought stocks. The broad Standard & Poor's 500 Index .SPX ended up 0.91 percent.
The National Association of Realtors' Pending Home Sales Index, based on contracts signed, rose 5.2 percent in July from June. Analysts had expected the index, which leads actual sales by a month or two, to fall 1 percent.
Home sales have dropped sharply since a popular tax credit for home buyers ended in April and the surprise gain in pending sales raised hopes the sector could soon stabilize.
A separate report from the Labor Department showed initial claims for state unemployment benefits dropped for a second straight week last week, slipping 6,000 to 472,000.