U.S. consumer confidence held steady in July and new single-family home sales hit their highest level in nearly 8-1/2 years in June, suggesting sustained momentum in the economy that could allow the Federal Reserve to raise interest rates this year.
The Conference Board said its consumer index was 97.3 this month after a reading of 97.4 in June. Economists had expected the index to drop to 95.9 in July.
The largely unchanged reading followed Britain's stunning vote last month to leave the European Union, which rattled global financial markets and led to a dip in other consumer sentiment measures.
The survey's so-called labor market differential, which closely correlates to the jobless rate in the employment report, improved this month after slipping in June.
the Commerce Department said new home sales increased 3.5 percent to a seasonally adjusted annual rate of 592,000 units last month, the highest level since February 2008. Economists had forecast new home sales, which account for about 9.6 percent of the housing market, rising to a rate of 560,000 units last month.
Sales were up 25.4 percent from a year ago. Last month's increase left new home sales in the second quarter well above their average for the first three months of the year.
The housing market is gaining speed with a report last week showing home resales vaulted to near a 9-1/2-year high in June. At the same time, single-family housing starts increased solidly in June. New home sales are likely benefiting from a persistent shortage of previously owned houses available for sale.
The U.S. Federal Reserve is expected to keep interest rates unchanged this week, deferring any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation.
Central to the debate at the Fed's July 26-27 policy meeting will be how to reconcile upbeat U.S. economic data, highlighted by strong job gains in June, with a global growth slowdown and other headwinds threatening the inflation trajectory.
For San Francisco Fed President John Williams, one of the 17 members participating in the central bank's rate-setting deliberations, all that is needed is a bit more confidence that inflation is indeed headed toward the Fed's 2 percent target.
The inflation measure the Fed prefers to track is currently at 1.6 percent.
Economists polled by Reuters expect the Fed to hold rates steady until after the election.
Respondents to the CNBC July Fed Survey now forecast just one rate hike this year, down from a 1.5 average in the June survey and nearly three rate hikes expected at the beginning of 2016.
The next hike, according to the 43 respondents, won't come until December, three months later than the previous forecast. The outlook for the Fed funds rate fell to just 60 basis points this year, 1.2 percent next year and 2.4 percent long term. The survey was conducted on Thursday and Friday.
Global economic weakness remains the biggest threat to the U.S. expansion, the top choice of 22 percent in the survey, followed by tax and regulatory policies with 20 percent. But outlook for U.S. growth remained stable at 2 percent this year and 2.26 percent next year. Inflation is forecast to be lower at 1.6 percent this year and rise to 2 percent next year.
U.S. crude prices fell on Tuesday, hitting three-month lows, on renewed worries of a glut while Brent settled higher due to its better fundamentals versus U.S. crude.
Trade group American Petroleum Institute (API) said after the market's settlement that U.S. crude stockpiles fell by 827,000 barrels last week, compared with analysts' expectations for a drawdown of 2.3 million barrels.
U.S. crude's West Texas Intermediate (WTI) futures CLc1 settled down 21 cents, or 0.5 percent, at $42.92a barrel. It extended losses after the release of the API data, sliding more than 1 percent. During the session, WTI fell to as low as $42.36 earlier, its lowest since April 20.
Reference: Reuters, CNBC
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