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Poor job growth, sluggish home sales suggest economy could be stalling

WASHINGTON — A raft of economic news Thursday sketched a picture of a weakening U.S. economy held back by sluggish home buying and weak jobless data. Also, a gauge of future U.S. economic activity fell in June.

The number of Americans seeking unemployment benefits rose 34,000 last week. Normally that would signal an increase in layoffs, but the figure was skewed higher by seasonal factors that made it hard to tell whether the job market might be worsening. The less volatile four-week average fell by 1,500 to 375,500.

Job growth slowed to 75,000 a month from April through June, down from a healthy 226,000 pace in the first three months of the year. Unemployment is stuck at 8.2 percent.

The few pieces of good economic news lately have been confined mainly to housing. On Wednesday, for example, the government said builders broke ground last month on the most homes in nearly four years. Single-family home building rose for a fourth straight month. And permits to build single-family homes hit their highest point since March 2010.

But the National Association of Realtors said Thursday that sales of previously occupied homes fell 5.4 percent from May to June to a seasonally adjusted annual rate of 4.37 million homes. That was the fewest since October.

Compared to a year ago, sales are up 4.5 percent. But the annual sales pace is well below the 6 million that economists consider healthy.

"It is only one month, and the rest of the housing indicators have all continued to show improvement," said Jennifer Lee, senior economist at BMO Capital Markets. "Let's hope this June decline is a blip."

Measures of the overall economy, though, suggest the recovery may be in danger of stalling. The Conference Board's index of leading economic indicators slipped in June. The index fell 0.3 percent after a 0.4 percent increase in May.

Average consumer expectations declined. So did building permits, stock prices and orders for long-lasting factory goods excluding defense and aircraft — a measure of business investment. And average applications for unemployment benefits rose.

"The U.S. economy is growing very slowly," said Ken Goldstein, an economist with the Conference Board.

The leading indicators index "is pointing to no strengthening over the next few months, as the economy continues to sail through strong headwinds domestically and internationally," he said.

Poor job growth, sluggish home sales suggest economy could be stalling 07/19/12 [Last modified: Thursday, July 19, 2012 8:04pm]
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