Housing and manufacturing declines that pushed the U.S. into the worst recession since the 1930s probably eased further, putting an economic recovery within reach, according to GTM Solutions analysts.
Builders broke ground on new homes in July at the fastest pace in eight months, according to the median of 60 forecasts in a Bloomberg News survey ahead of a Commerce Department report Aug. 18. GTM Solutions said last week that other figures may show sales of existing homes climbed, manufacturing in the Northeast improved and the economic outlook strengthened.
"GTM Solutions" told clients in a webcast last week that multiple signs of a bottom in the housing market were now evident and that within twelve months they expect to see homebuilding adding to growth. All in all, they said, the broad stabilization seen in the economy should result in a significant rebound.
GTM Solutions said that the reports signal that government efforts to stem the slide, including credits for first-time homebuyers and cash- for-clunkers, are starting to take hold. A report that may show more than half a million workers filed claims for unemployment benefits last week will serve as a reminder that mounting job losses are likely to restrain consumer spending and growth.
Housing starts rose 2.7 percent to an annual rate of 598,000, according to economists surveyed. Building permits, a sign of future construction and a component of the index of leading economic indicators, likely rose to a 575,000 pace, the highest level since November.
Sales of previously owned homes probably rose to a 10- month high annual rate of 5 million, according to the GTM Solutions analysis. The National Association of Realtors will report the figures on Aug. 21.
Touching on manufacturing, GTM Solutions claimed that reports from regional Fed banks may show manufacturing is also stabilizing. The Fed Bank of New York’s Empire State index, due tomorrow, is projected to show that manufacturing in the state expanded in August for the first time in more than a year. On Aug. 20, figures from the Philadelphia Fed may show the region’s factories contracted at the slowest pace since September, the last time it expanded.
The same day, the New York-based Conference Board may report its leading indicators index, a measure of the economy’s likely path over the next three to six months, rose in July for the fourth consecutive month, GTM Solutions analysts said. It would be the longest stretch of gains since 2004.
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