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| US economy shows signs of stronger recovery | US economy shows signs of stronger recovery |
| (about 5 hours later) | |
| The US has registered surprisingly strong economic data, suggesting the recovery may be gathering steam. | The US has registered surprisingly strong economic data, suggesting the recovery may be gathering steam. |
| New home sales, a lead component of past recoveries, surged 16% in January to the highest rate since July 2008. | New home sales, a lead component of past recoveries, surged 16% in January to the highest rate since July 2008. |
| The Conference Board index of consumer attitudes rebounded to 69.6 in February - the highest since November - from an upwardly revised 58.6 in January. | The Conference Board index of consumer attitudes rebounded to 69.6 in February - the highest since November - from an upwardly revised 58.6 in January. |
| It suggested Americans had recovered from the shock of a sharp rise in payroll taxes over the New Year. | It suggested Americans had recovered from the shock of a sharp rise in payroll taxes over the New Year. |
| Markets had been rattled a month ago by the size of the knock to consumer sentiment from the tax rise, which came as part of a deal between Democrats and Republicans to avert the much bigger round of automatic tax rises and spending cuts dubbed the fiscal cliff. | Markets had been rattled a month ago by the size of the knock to consumer sentiment from the tax rise, which came as part of a deal between Democrats and Republicans to avert the much bigger round of automatic tax rises and spending cuts dubbed the fiscal cliff. |
| Another hangover from that deal is that some $85bn of spending cuts, or "sequesters", that had been due on 1 January have instead been delayed to the end of this week, with Congress currently trying to hammer out a deal to postpone the date even further. | |
| Markets were buoyed by the US data, which were both well above expectations. | Markets were buoyed by the US data, which were both well above expectations. |
| The Dow Jones Industrial Average recovered half a percent in morning trading, despite ongoing market jitters that Italy's indecisive election results may herald a new chapter in the eurozone's financial crisis. | The Dow Jones Industrial Average recovered half a percent in morning trading, despite ongoing market jitters that Italy's indecisive election results may herald a new chapter in the eurozone's financial crisis. |
| The markets also took heart from a robust defence of the Federal Reserve's money-creating quantitative easing policy by its Chairman Ben Bernanke, giving testimony before Congress. | |
| He also called on Congress to delay the sequesters, which he warned would help create a "significant headwind" for the US recovery. | |
| New construction jobs | New construction jobs |
| The jump in sales of newly-built homes is of particular note, as housing construction has typically played a lead role in past US economic recoveries. | The jump in sales of newly-built homes is of particular note, as housing construction has typically played a lead role in past US economic recoveries. |
| But in this recession, the US housing construction industry - which largely collapsed between 2006 and 2010 - has failed until now to recover, in large part due the difficulty in obtaining a mortgage, and a glut of cheap repossessed homes dumped on the market by the banks. | But in this recession, the US housing construction industry - which largely collapsed between 2006 and 2010 - has failed until now to recover, in large part due the difficulty in obtaining a mortgage, and a glut of cheap repossessed homes dumped on the market by the banks. |
| However, this picture has steadily improved over recent months - the overhang of unsold properties has fallen to a 13-year low, while the average interest rate on new mortgages has fallen to an all-time low thanks to interventions by the US Federal Reserve. | However, this picture has steadily improved over recent months - the overhang of unsold properties has fallen to a 13-year low, while the average interest rate on new mortgages has fallen to an all-time low thanks to interventions by the US Federal Reserve. |
| House prices have also turned the corner. | |
| Separate data released on Tuesday showed that the closely-watched Case Shiller index of home prices in 20 major US cities were 6.8% higher in the three months to December 2012 than they had been a year earlier. | |
| The seasonally-adjusted percentage increase in new home sales registered in January was the biggest since 1993. | The seasonally-adjusted percentage increase in new home sales registered in January was the biggest since 1993. |
| However, the market is recovering from historic lows, and the January figure is still about a third below the level of sales that was typical during the 1970s, 80s and 90s, before last decade's housing bubble. | However, the market is recovering from historic lows, and the January figure is still about a third below the level of sales that was typical during the 1970s, 80s and 90s, before last decade's housing bubble. |
| The number of permits issued for the construction of new homes has hit a four-and-a-half-year high. Each new home creates three construction jobs for a year on average. The construction industry has added a total of 98,000 jobs since September. | The number of permits issued for the construction of new homes has hit a four-and-a-half-year high. Each new home creates three construction jobs for a year on average. The construction industry has added a total of 98,000 jobs since September. |