Best shape `in 30 years'

New-home sales up, labor costs slowed, U.S. reports show

Jobless benefits decline

Low interest rates, plentiful jobs boon to citizens, analyst says

April 30, 1999|By BLOOMBERG NEWS

WASHINGTON -- More Americans are buying new homes, labor costs for U.S. companies are rising at the lowest rate on record and claims for jobless benefits are falling, several government reports showed yesterday.

"This is the best economy in 30 years," said Cynthia Latta, an economist at Standard & Poor's DRI in Lexington, Mass. Low inflation, plentiful jobs and low interest rates are the reasons "a lot of people are saying, `I'm in the best shape I've ever been financially,' " she said.

New single-family home sales rose 2.1 percent in March, reversing a 2 percent decline a month earlier, as sales in the West posted their biggest monthly gain in four years, Commerce Department figures showed.

The employment cost index -- the broadest measure of wage, salary and benefit costs -- rose 0.4 percent in the first three months of the year after rising 0.7 percent in the fourth quarter, Labor Department figures showed. That was the smallest since the government started tracking the statistics in 1982, a Labor Department spokeswoman said.

First-time claims for state unemployment benefits fell a larger-than-expected 20,000 last week to a seasonally adjusted 294,000 after decreasing 5,000 the previous week, the Labor Department also reported. Analysts expected claims to fall to 310,000 last week.

A 24 percent rise in March new-home sales in Western states proved to be more than enough to offset declines in other regions of the country. The overall gain for the month translated into an annual rate of 909,000 units, higher than last year's record sales total of 886,000 homes.

While most analysts do not see housing setting another record this year, builders say they are confident that business will improve in the months ahead.

The inventory of new homes for sale at the current sales pace rose to a 4.1-month supply in March from a four-month supply in February, the government report also showed. And the median price of new homes fell 1.5 percent in March to $153,000 from $155,400 in February.

The government's ECI report showed that wage and salary costs increased 0.5 percent in the first quarter, the smallest increase since a 0.4 percent rise in the third quarter of 1992. Benefit costs rose 0.3 percent, the least since a 0.2 percent rise in the first quarter of 1997. In the finance, insurance and real estate industries alone, total compensation fell 0.7 percent, the biggest drop since June 1987.

The slow growth of labor costs does not necessarily mean worker pay is stagnating. Wages and salaries, after inflation, are rising at their "best rates since the late 1960s," said Suzanne Rizzo, an economist at Maria Fiorini Ramirez Inc. in New York.

Pub Date: 4/30/99

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