Reuters Story - September 30, 1999 10:22
WASHINGTON, Sept 30 (Reuters) - U.S. consumers bought new homes in August at the
second fastest pace on record and dramatically quicker
than expectations despite rising
mortgage rates, the government said on Thursday.
......The report showed that the housing market remains strong and shows no signs of flagging
despite two interest rate hikes by the Federal Reserve in recent months. Economists have been
hoping that the housing market, a driving force behind robust consumer spending, would slow
under its own steam and avoid the need for a third
interest rate rise.
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NAPM-Chicago reported that its business barometer
continued to "slump" as it declined to 53.8, "signaling slowing economic growth."................
......However, the prices paid index rose "dramatically," climbing above 70 for the first time since June 1995.
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NEW YORK, Sept 30 (Reuters) - U.S. and foreign exchange markets showed little reaction to
a report Thursday morning showing that second quarter U.S. economic growth grew less than
thought earlier................"There's a significant reduction of growth in the second quarter, but it's really more of an
inventory reduction," said Rick Egelton, senior vice president and deputy chief economist at
Bank of Montreal. "I don't think it will have a significant impact on the markets."
.............The slowdown, however, could be a precursor to stronger growth in the quarter ending
September 30. .............
Egelton said that the GDP data will not change the Fed's view of the U.S. economy's strength.
"We still think there's a good possibility we could get another 25 basis point rate hike later in
the year, and it will depend very strongly on next week's payroll employment numbers," he said.
The U.S. Labor Department is scheduled to release September payroll data on October 8.
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