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Data Back Economic Rebound

October 18, 2003|From Reuters

Consumer sentiment rebounded in early October, and U.S. home builders accelerated new construction in September to a near 17-year high, according to two reports released Friday that provided further evidence pointing to fast-paced economic growth.

The University of Michigan said its preliminary gauge of consumer sentiment rose to 89.4 this month from a final reading of 87.7 last month, beating forecasts. It was the first increase in sentiment since July.

"It shows that consumers are sensing some good news on the job front and the income front," said Kurt Karl, head of research at Swiss Re in New York.

The confidence survey's index of current conditions rose sharply to 102.2 from 98.4. The expectations index edged up to 81.2 from 80.2.

A separate report from the Commerce Department showed groundbreaking for new homes jumped 3.4% to a seasonally adjusted annual rate of 1.89 million units in September, and up from an upwardly revised 1.83-million pace in August.

Low interest rates have kept the housing market booming, even as they have risen from their historical midsummer lows. During September, mortgage rates fell by half a percentage point, though that move has reversed in recent weeks on the upbeat economic news.

September housing starts came in close to July's 17-year high and rose in all regions of the country except the South, where they fell 1.3%.

Though building permits, an indicator of future construction, fell 2.2% to a seasonally adjusted annual rate of 1.86 million units, they still remain high, and home builder confidence has continued to rise in recent months despite higher interest rates.

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