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CNN Live At Daybreak

Housing Market Picks Up, Manufacturing Does Not

Aired February 26, 2002 - 06:35   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: As we've told you home sales were at a record high last month, but new surveys show the outlook for the labor market and manufacturing remain rocky.

CNN Financial News correspondent Kathleen Hays sorts out the reports and what they reveal about the economy's prospects for recovery.

(BEGIN VIDEOTAPE)

KATHLEEN HAYS, CNN CORRESPONDENT: As warm weather entice buyers, existing home sales soared to a new record in January, up 16 percent to more than six million units at an annual rate. Word is that mortgage rates will rise as the economy recover spur buying as did rising home prices in fears of getting priced out of the market, but experts say the outlook remains bright.

ORAWIN VELV, SENIOR ECONOMIST, FANNIE MAE: We think interest rates are going to rise toward the end of the year but the rate will be still below 7 1/2 percent, so we're talking about conditions that remain very affordable for home buying.

HAYS: For the economic recovery to really take hold, experts say businesses need to start investing again in plan and equipment, but a new survey of capital spending plans signaled another drop in business investment in the first three months of the year.

KATHLEEN CAMILLI, ECONOMIST: I would expect at some point this year that that will start to turn positive again, but this downturn is very severe, it's as severe as the 1981, '82 recession, and it will take a while to recover from because of the excessive investment that took place between '95 and 2000.

HAYS: In addition, the latest survey of the labor market by Manpower, Inc. showed the employment outlook is still bleak despite a slight uptick in plans to hire new workers in the second quarter.

JEFFREY JOERRES, CHAIRMAN & CEO, MANPOWER, INC.: The expression I like to use is we may have stopped the bleeding, but it doesn't mean the patient's really OK, because we've got a lot to go yet here. We're still in some difficult situations when it comes to manufacturing and some of the other segments there.

HAYS: Now the focus turns to Fed Chairman Alan Greenspan's testimony to Congress on Wednesday. Wall Street's waiting to see if he emphasizes the strength in housing or the clouds hanging over manufacturing because that could be key to the next move on interest rates.

Kathleen Hays, CNN Financial News, New York.

(END VIDEOTAPE)

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