US new home sales slipped 0.8 per cent in June, a smaller decline than expected, and consumer confidence surged this month as low mortgage rates combined forces with a strengthening economy, reports showed today.
Treasury prices slipped on the buoyant consumer sentiment report, which suggested the economy may have picked up in July after a soft patch in June. The dollar and stock markets climbed.
The Conference Board, a private forecasting group, said its measure of consumer sentiment climbed to 106.1 in July from a revised 102.8 in June, outpacing Wall Street forecasts of a rise to to 102.0.
It was the fourth straight monthly rise in the index, which is generally seen as a proxy for future spending - though some argue the correlation is not always exact.
Analysts said the rise in confidence showed - as Federal Reserve Chairman Mr Alan Greenspan told Congress last week - that recent signs of weak spots in the economy would be short-lived.
The per cent age of consumers who said jobs were hard to get dipped to 26.0 from 26.2, while those saying jobs were plentiful increased to 19.8 from 18.3
The present situation index rose to 106.5. from 105.9 in June, while the expectations index soared to 105.8 from 100.8.
In separate reports on the retail sector, chain store sales picked up in the latest week compared with the same time last year, thanks to a bout of warm weather and healthy demand for back-to-school merchandise.
Sales rose by 0.2 per cent in the week ended July 24, matching a 0.2 per cent rise in the previous week, the International Council of Shopping Centers and UBS said in a joint report. Compared with the same week a year ago, sales increased 3.8 per cent , up from the 3.3 per cent growth pace of the preceding week.
A report by Redbook Research, an independent company, echoed that strength, noting that retailers focused on clearing out summer goods to make room for back-to-school items.
Sales at major retailers increased by 3.5 per cent on a year-over-year basis for the week ended July 24, up from the preceding week's 2.6 per cent pace, Redbook said. Sales in July so far were down 0.3 per cent compared with June.
"Retailers are doing well, including key companies in the heavily weighted discount sector, where strength can lift the entire retail group," the report said.