Home-construction rose in November, manufacturing pulled out of a three-month slide and inflation was tame as low borrowing costs and discounts kept the US recovery going.
There's no evidence of a "double dip" back into a recession, said Jeffrey Immelt, chairman and chief executive officer of General Electric Co, in a conference call with analysts to discuss the company's earnings outlook. "If the consumer pulled back, that would [affect] everyone. We don't see that in our data." Builders broke ground on new homes at an annual pace of 1.697 million units, up 2.4 percent from October, the Commerce Department said.
A 0.1-percent increase in November's consumer price index, the most widely followed gauge of US inflation, followed a 0.3-percent rise. Prices were 2.2 percent higher than they were in November 2001.
Thirty-year fixed mortgage rates close to three-decade lows are buoying home sales. Consumer spending, which accounts for two-thirds of the economy, is holding up as low prices lure shoppers.
Best Buy Co has been offering discounts on DVDs, CDs and electronic products to attract customers. While the company said sales may rise in the fourth quarter, the largest US electronics chain cut its profit estimate because of an expected loss at a music stores unit.
Consumer demand was enough to boost industrial production by 0.1 percent last month. Production picked up at makers of automobiles, electronics, appliances and other consumer goods.
For the economic recovery to gain strength, companies need to boost spending on equipment, Federal Reserve officials have said.
The Fed's manufacturing report showed that's not happening.
Business equipment production fell 0.4 percent in November after declining 0.7 percent in the prior month and 1.1 percent in September.
"This was a business recession, it wasn't a consumer recession, so that requires companies to be able to build stronger profit margins and we'll need companies to boost capital spending and hiring," said John Ryding, chief economist at Bear Stearns & Co.
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