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Jobless numbers, ailing housing industry point to painful recovery

Last update: October 28, 2009 - 9:09 PM

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WASHINGTON - The Great Recession may be over, but the recovery is just beginning -- and it's doesn't promise to be much easier.

Economists forecast the nation's total output grew at an annual rate of 3.3 percent between July and September, after contracting for a record four straight quarters. That growth has been fueled by a huge influx of government cash, including a temporary tax credit for first-time homeowners and a $1.25 trillion Federal Reserve program to keep mortgage rates low.

Both efforts are likely to end by next summer, and the housing industry is already feeling it. New home sales in September unexpectedly fell 3.6 percent, the first decline since March and a distinct sign of weakness in a market that had rebounded strongly over the summer.

Homebuilders are traditionally big employers, but the industry isn't hiring yet because there's a glut of homes on the market. There were 251,000 new homes for sale at the end of September, or about 7.5 months' supply at the current sales pace. That's about two months too much.

While the unemployment rate fell slightly in most metro areas in September, the trend was fueled by discouraged job seekers leaving the workforce, according to government data released Wednesday. The rate fell in 223 of 380 metros, rose in 123 areas, and was unchanged in 34.

In the manufacturing sector, September orders to factories for big-ticket manufactured goods rose 1 percent last month -- an improvement from a 2.6 percent drop in August, the government reported. Demand for machinery offset weakness in commercial aircraft and autos.

New home sales fell to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists surveyed by Thomson Reuters had expected a pace of 440,000.

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