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Americans are buying homes again, pushing up sales and prices after a six-year slump. The recovery has been modest and housing has a long way back to full health. But the steady increases suggest housing is no longer weighing on growth. The same can't be said for manufacturing, which has slumped since spring. Europe's debt crisis and slower growth in China and other emerging markets have hurt demand for American exports. Many companies have also held back on purchases of equipment and machinery. They are waiting to see if Congress can reach a deal before the end of the year to avert sharp tax increases and spending cuts. The September growth in factory output was an encouraging sign that manufacturing may be starting to rebound. A separate survey from the Institute for Supply Management also showed manufacturing activity expanded for the first time since May, buoyed by new orders and hiring. A more confident consumer could help revitalize sluggish factory growth. Consumer sentiment rose to a five-year high in October, according to a survey by the University of Michigan. And Americans stepping up their spending at retail businesses in September for the second straight month, buying more cars and iPhones. Peter Newland, an economist at Barclays, said the increase in consumer spending should translate into more factory orders and stronger production in the coming months. Still, most economists said the weak overseas growth should drag on U.S. manufacturing for some time. "There is still little evidence to suggest that a sustained upturn in the manufacturing sector is just around the corner," Erik Johnson, U.S. economist at IHS Global Insight, said in a note to clients.
[Associated
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