US factory orders increase but new home sales tumble

THE upswing in the US economy was underlined yesterday as the latest government figures showed new factory orders rose 1.1 per cent, their third straight monthly increase.

Inventory figures for November continued the recovery trend by growing for the second month in a row with a 0.2 per cent rise. After stocks fell for more than a year before October, the growing supplies indicate factories are ramping up production as the economy becomes healthier.

A separate survey of US housing showed pending sales fell more than expected in November, which was explained by the end of a rush to take advantage of a popular tax credit.

The National Association of Realtors (NAR) said its index, based on the numbers of contracts signed, dropped 16 per cent to 96.0, after rising for nine straight months. US home sales had been boosted by a $8,000 (£5,000) tax credit for first-time home buyers, which was set to run out at the end of November but was extended to mid-2010. Despite the monthly drop, the NAR said the index was 15.5 per cent higher compared to November 2008, showing the market had gained “momentum”.

NAR’s chief economist Lawrence Yun expects a surge in the spring as more home buyers take advantage of affordable housing conditions.