- Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ
U.S. consumer confidence rose to the highest level in more than six years in June, while sales of new homes increased in May, reinforcing view that the nation's economy has picked up steam once again. According to the Conference Board, consumer morale improved to 85.2, up from 82.2 in May amid household optimism about the labour market. The June figure is the highest reading since January 2008, a month after the Great Recession began. However, the index is still below the level seen before the recession, when it usually hovered around the 90 mark.
Separately, another report by the Commerce Department revealed new home sales surged 18.6% to a seasonally adjusted annual rate of 504,000 units, the highest since May 2008. The rise in sales was the biggest since January 1992; however new home sales data is extremely volatile as it is calculated based on a small sample, thus last month's increase likely exaggerate the pace of improvement. Nevertheless, rising supply of houses, smaller price increases, rising employment and ultra-low borrowing costs bolster activity in the housing market. Moreover, following the 1.0% contraction in the first quarter, the economy is seen to regain momentum and expand 3.8% in the second quarter.
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