Consumers, home sales paint less gloomy picture

By Burton Frierson

NEW YORK (Reuters) - Consumer sentiment rebounded in July from a 28-year low and business investment rose unexpectedly last month, according to data on Friday that showed rare signs of resilience for the U.S. economy.

Data from the struggling housing market also contributed to the less gloomy picture. New home sales in June were not as weak as expected, though few doubt it will take time for housing to recover from its worst slump since the Great Depression.

The Reuters/University of Michigan Surveys of Consumers said its final index of confidence rose to 61.2 in July from 56.4 in June.

The June reading was the lowest since 51.7 in May 1980, which was also the weakest reading ever. The index dates back to 1952, though the survey has been conducted since 1946.

Analysts saw plenty of reasons to be skeptical of a long-lasting recovery in sentiment, seeing much of the improvement linked to government economic stimulus efforts and falling energy prices -- both of which may be temporary.

"It's too early to say that we've turned the corner because the tax rebates are temporary," said Gary Thayer, senior economist at Wachovia Securities in St. Louis, Missouri.

"We are getting some lower energy prices but we're heading into the hurricane season so there's some risk that energy prices could rise again if there's a major hurricane."

On Wall Street, stocks added to their earlier gains after the stronger-than-expected consumer sentiment and housing data, while the dollar rose against the euro and yen.  Continued...