After weeks of one negative report after another, the economy finally got some news Friday that wasn't half bad.
WASHINGTON — After weeks of one negative report after another, the economy finally got some news Friday that wasn’t half bad.
Wall Street, which suffered a stomach-churning drop Thursday, managed a modest gain.
Oil prices hit their lowest point since early June, and gas fell to a seven-week low. Military spending helped boost big-ticket factory orders in June, and new-home sales fell less than expected.
Still, private economists cautioned that a few better-than-expected data releases did not mean the economy’s problems had disappeared.
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The Commerce Department reported that sales of new homes dropped by 0.6 percent in June, less than half the decline that had been expected.
May sales were revised to show more strength than originally thought although they were still down. New-home sales have fallen in seven of the past eight months as the nation endures the steepest slump in housing in a generation.
But economists were encouraged that the pace of the decline has slowed significantly and two regions of the country — the Northeast and the Midwest — actually posted sales gains in June.
Sales fell in the South and West. The inventory of unsold new homes also fell to a 10-month supply at the June sales pace, still high, but down from the peak of 11.2 months in March.
Brian Bethune, chief U.S. financial economist at Global Insight, said despite the positive flickers in the housing report, “the housing market remains extremely fragile.”
On the energy front, oil prices declined $2.23, settling at $123.26 a barrel on the New York Mercantile Exchange Friday as gas prices dipped to $4.006 per gallon, the lowest in nearly seven weeks, according to a survey by AAA, the Oil Price Information Service and Wright Express.
At the same time, investors were encouraged by some slightly better news about consumers. The Reuters/University of Michigan index of consumer sentiment for July came in at 61.2, beating expectations and slightly better than the 28-year low of 56.4 hit in June.
Still, private economists cautioned that a reading at 61.2 was still in recession territory and far below the level of a year ago when the confidence index was at 90.4.
They said the economy faces sizable head winds from the prolonged housing slump, which has driven mortgage foreclosures higher and resulted in billions of dollars of losses for financial companies.
On top of that, the economy has shed nearly a half-million jobs since January as economic growth has stalled because of the troubles in housing, the credit crunch and soaring energy prices. Congress is moving to pass its most sweeping response to the housing crisis.
Supporters say the bill could help 400,000 at-risk homeowners avoid foreclosure while offering tax breaks for first-time homebuyers and providing federal support if needed to stabilize Fannie Mae and Freddie Mac, the two companies which own or guarantee nearly half the nation’s mortgages.
The Commerce Department also reported Friday that orders to factories for big-ticket manufactured goods such as cars, appliances and machinery increased by 0.8 percent in June, the strongest gain in four months.
But excluding demand for military equipment, total orders would have been up a much more modest 0.1 percent.