WRAPUP 3-US data reinforce solid fourth-quarter growth hopes

* Nov durable goods orders ex-transportation jump 2.4 pct

* Consumer spending up 0.4 pct, incomes gain 0.3 pct

* Jobless benefit claims fall 3,000 last week

* New home sales rise 5.5 pct, prices up 8.0 pct in Nov
(Recasts, updates markets, adds byline)

By Lucia Mutikani

WASHINGTON, Dec 23 (BestGrowthStock) – Demand for a range of
long-lasting U.S. manufactured goods surged in November and
consumer spending rose for a fifth straight month, cementing
views of a solid economic growth pace in the fourth quarter.

The brightening outlook was also bolstered by other reports
on Thursday showing an improving labor market and consumer
sentiment, though housing continues to struggles.

Durable goods orders excluding transportation increased 2.4
percent last month, the largest advance since March, the
Commerce Department said. The increase followed a 1.9 percent
drop in October and beat economists’ expectations for a 1.6
percent rebound.

The durable goods orders report should help to allay fears
of a marked slowdown in factory activity.

“This looks like an economy that is now growing over three
percent on a quarter-over-quarter annualized basis and even
more important as we head into 2011, there is ample stimulus in
the system now,” said Brian Levitt, an economist at Oppenheimer
Funds in New York.

He was referring to the $858 billion tax deal recently
signed into law by President Barack Obama, which led
forecasters to raise estimates for next year by as much as a
percentage point, on top of the Federal Reserve’s program to
buy $600 billion worth of government bonds to stimulate the
recovery.

The economy grew at a 2.6 percent annualized pace in the
third quarter and a raft of recent upbeat data ranging from
retail sales to trade has led many forecasters to expect gross
domestic product to expand at a 3 percent to 3.5 percent pace
over the final three months of the year.

Despite the optimistic data on durable goods excluding
transportation, overall orders dropped 1.3 percent last month,
dragged down by a plunge in the volatile civilian aircraft
component. A gauge for business spending rebounded 2.6 percent
in November after dropping 3.6 percent the prior month.

In another report, the department said consumer spending
rose 0.4 percent, a touch below expectations for a 0.5 percent
gains. October’s spending was revised up 0.7 percent.

HAND OVER TO CONSUMERS

Manufacturing has largely led the economy’s recovery from
the worst recession since the Great Depression of the 1930s,
but the spending data offered more evidence that handover of
the baton to consumers was under way. Consumer spending
accounts for more than two-thirds of U.S. economic activity.

The data had little impact on U.S. financial markets, where
trade volumes were light ahead of the Christmas break. Stocks
on Wall Street were trading flat, while prices for U.S.
government fell marginally. The dollar was down against a
basket of currencies.

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For graphics, click on:

U.S. jobless benefits breakdown:http://r.reuters.com/zeg49q

U.S. savings rate compared to jobless rate:

http://r.reuters.com/pym43r

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The spending report suggested consumer spending probably
accelerated in the current quarter after growing at a 2.4
percent rate in the July-September period.

There was also encouraging news on the labor market, with
initial claims for state unemployment benefits falling 3,000
last week to 420,000, matching economists’ expectations. For
details see [ID:nN22114572]

Last week’s claims data covered part of the survey period
for the government’s closely watched employment report for
December.

“This report is consistent with our view that the pace of
labor market improvement is picking up,” said Nicholas Tenev,
an economist at Barclays Capital in New York.

Consumers are also starting to notice the improving
economic picture. The Thomson Reuters/University of Michigan’s
final reading on the overall index on consumer sentiment rose
to 74.5 this month, the highest since June, from 71.6 in
November. For details see [ID:nN23136350]

CRUDE PRICES WATCHED

Economists expect the improved confidence to continue in
2011, but caution that rising oil prices could slow progress
somewhat.

“If we start to see over ninety dollars a barrel or over
three dollars a gallon at the pump, that’s going to have
implications for the consumer,” said Oppenheimer Funds’
Levitt.

The price of crude oil rose 0.8 percent to $91.23 (CLc1: ) a
barrel in New York on Thursday.

Though consumers are spending again, inflation remains
muted. The Federal Reserve’s preferred measure of consumer
inflation — the personal consumption expenditures price index,
excluding food and energy — rose 0.1 percent after being flat
for four straight months.

In the 12 months through November, the core PCE index rose
0.8 percent, the same margin as in October and still the
smallest year-on-year gain since records started in 1960.

While the broader economy is now firmly on an upward
trajectory, data from the Commerce Department on Thursday
underscored that housing continues to struggle. New
single-family home sales increased 5.5 percent to a seasonally
adjusted 290,000 unit annual rate in November, less than
economists’ expectations for a 300,000 unit pace.
[ID:nN222949]
(Additional reporting by Emily Kaiser; Editing by Andrea Ricci
and Leslie Adler)

WRAPUP 3-US data reinforce solid fourth-quarter growth hopes