US home starts rise in buoyant economy
Builders started work on more homes in September and American consumers this month were the most optimistic in seven years, signalling the US economy will ride out a global slowdown.
Housing starts climbed 6.3 per cent to a 1.02 million annualised rate from a 957,000 pace in August as multifamily and single-family projects advanced, the Department of Commerce said. The Thomson Reuters/University of Michigan preliminary sentiment index for October increased to 86.4, the strongest since July 2007.
Gains in residential construction will help underpin the economic expansion as the recent drop in mortgage rates lifts home sales and gives builders reason to take on more projects. Other figures showing factory production rebounded last month and claims for jobless benefits dropped last week to the lowest level in 14 years added to evidence the turbulence in global markets has yet to depress the world's largest economy.
"The fundamentals continue to look solid," said Gus Faucher, an economist at PNC Financial Services Group. "The turmoil in the market doesn't reflect the underlying US economic fundamentals."
Job gains on pace for their strongest year since 1999 and cheaper petrol prices are keeping households upbeat about the economic expansion amid the weakening in Europe and emerging nations. Faster wage increases and more broad-based improvement in the labour market would help further spur the consumer spending that makes up 70 per cent of the economy.
"An improving job market and lower energy costs are going to offset a lot of what's happening," said Joseph LaVorgna, chief US economist of Deutsche Bank Securities in New York.