WRAPUP 3-US home sales at 3-month low, jobless claims spike

* New jobless claims rise more than expected

* Existing home sales lowest in three months

* Gauge of economy’s prospects slips in June
(Recasts with details, updates markets, adds byline)

By Lucia Mutikani

WASHINGTON, July 22 (BestGrowthStock) – Sales of previously owned
U.S. homes hit a three-month low in June while new claims for
jobless benefits surged last week, the latest indications that
the economy is on the ropes.

Another report on Thursday showed an index of leading
indicators, a gauge of the economy’s future prospects, fell
last month, consistent with views the recovery was cooling and
the slowdown could persist through the end of the year.

With the data stream continuing to be weak, fears have
escalated that the economy may be slipping back into recession,
but both private economists and Federal Reserve officials see
the recovery still intact.

“The soft patch continues. We are above stall speed now and
losing momentum,” said Robert Dye, a senior economist at PNC
Financial Services in Pittsburgh. “If we get too close to stall
speed for too long, we are likely to fall below that and that’s
where the risk of a double-dip recession comes in.”

Existing home sales fell 5.1 percent to an annual rate of
5.37 million units, the National Association of Realtors said,
but better than market expectations. The median home sales
price in June was $183,700, a 1 percent increase from the prior

A separate report from the Labor Department showed initial
claims for state unemployment benefits rose 37,000 to 464,000
last week, more than erasing a decline in the prior week. The
rise exceeded market expectations for a reading of 445,000.

Given that the housing data was not as bleak as financial
markets had feared, stocks on Wall Street rallied. Investors
were also cheered by strong earnings from companies such as
Caterpillar Inc (CAT.N: ), diversified manufacturer 3M Co (MMM.N: )
and package deliverer United Parcel Service Inc (UPS.N: ).

Both Caterpillar and UPS raised their full-year outlooks,
but remained cautious on the domestic economy.

All three main U.S. stock indexes were up more than 2
percent in afternoon trade, while prices for safe-haven
government bonds fell. The U.S. dollar fell against the euro
after data from the single monetary area eased fears of a
double-dip recession there.

Euro zone industrial orders rose in May at their fastest
annual rate in 10 years, while the private sector grew
unexpectedly this month. [ID:nSLALIE68S] [ID:nBRQ009921]


Job growth in the United States has slowed after strong
gains early in the year, crimping household spending and
holding back the economy’s recovery from the most painful
recession since the 1930s.

In congressional testimony on Wednesday and Thursday, Fed
Chairman Ben Bernanke described the outlook as “unusually
uncertain” and said the U.S. central bank stood ready to take
further steps to aid the economy if needed.

“We are ready and we will act if the economy does not
continue to improve if we do not see the kind of improvements
in the labor market that we are hoping for and expecting,” he
told the House of Representatives Financial Services Committee
on Thursday.

However, Bernanke said the U.S. central bank did not expect
the economy to stall, remarks that were echoed by New York
Federal Reserve Bank President William Dudley.

“The road to recovery is turning out to be a bit bumpy as
relatively weak consumer spending and the ongoing problems in
financial markets are keeping growth far less robust than we
would like,” Dudley said. “We think the risk of double dip is
quite low.” [ID:nN22238235]

The claims report covered the survey week for government’s
closely monitored employment report for July, which is
scheduled for release on Aug. 6.

A third report on Thursday showed the Conference Board’s
index of leading economic indicators slipped 0.2 percent in
June after rising 0.5 percent in May.

“The indicators point to slower growth through the fall.
Improvement in the industrial core of the economy will moderate
as inventory rebuilding slows,” said Ken Goldstein, an
economist at the Conference Board.

While the number of people still receiving unemployment
benefits after an initial week of aid dropped sharply to 4.49
million in the week ended July 10, it likely reflected people
falling off the benefit rolls rather than finding work.

Similarly, the number of people on emergency benefits
tumbled to 3.48 million in the week ended July 3, but the
figure is set to rise in coming weeks after the Senate finally
voted late on Wednesday to extend benefits for the long-term

Some 2.5 million unemployed Americans have seen their
benefits lapse since the end of May as the Senate was
deadlocked over how to cover the $34 billion cost of extending
them through November.

According to Labor Department data, about 45 percent of the
14.6 million people unemployed in June had been out of work for
six months or more.
Existing home sales graphic: http://link.reuters.com/byf98m
Initial jobless claims graphic:

(Additional reporting by Corbett Daly; Editing by Neil

WRAPUP 3-US home sales at 3-month low, jobless claims spike