Spending Rebounds; Jobless Claims Drop

Consumer spending rose more than expected in October, increasing 0.7%, compared with a 0.6% decline in September, according to Commerce Department data. Personal income rose by 0.2% for the second consecutive month.

A separate report from the Labor Department showed that the number of Americans filing claims for unemployment benefits fell last week by 35,000 to 466,000, the lowest level since September 2008. Total claims lasting more than one week also dropped, indicating a gradual improvement in in the labor market.

Another piece of positive news on the housing front: New-home sales climbed 6.2% in October to an annual pace of 430,000, the highest level since September 2008, the Commerce Department said. The uptick adds some extra shine to the housing market after Monday’s news that existing home sales rose 10.1% and suggest that the government’s prodding of the housing market is working. Even small growth would represent a sharp reversal after September, when new home sales declined 3.6%, upsetting expectations for 5.5% growth. A second month of surprise decline, however, would be a clear disappointment for Wall Street.

A deluge of buyers to meet the original Nov. 30 deadline for the first time home buyers credit could result in a greater than expected increase. That’s exactly what happened earlier this week in existing home sales, which were reported to have increased by a much better than expected 10.1% in October. The supply of homes on the market has now fallen to a level that is closer to facilitating price stability, or a general balance between buyers and sellers, according to Lawrence Yun, NAR chief economist.

This article is an excerpt from our Early Bird markets story, which was originally published the morning of Nov. 25.