Factory Orders Jump; Home Sales Hit a High
Orders to U.S. factories for big-ticket manufactured goods rose a solid 1.9% last month, the best showing since November. Sales of new homes hit an all-time high.
The reports Wednesday provided further evidence that the economy has recovered from its March slowdown.
The Commerce Department said the increase for durable goods was propelled by strong demand for transportation equipment, especially airplanes, which helped push the overall number up by $3.71 billion to a seasonally adjusted $200.3 billion. Excluding transportation, orders would have edged down a slight 0.2%.
In a second report, the Commerce Department said sales of new homes, which were already at a record level in March, inched even higher in April, rising 0.2% to a new record annual rate of 1.32 million units. The median price of a new home jumped 6.1% to a new all-time high of $230,800.
Economists said the strength in both reports showed that worries of a serious slowdown from this year’s oil shock were overblown.
“In March we had a combination of bad weather and bad seasonal adjustment problems which made that month look too weak,” said David Wyss, chief economist at Standard & Poor’s in New York.
He said based on the data so far, economic growth for the first three months of the year will probably be revised up in a government report today to around 3.5%, compared with the originally reported 3.1% growth.
Wyss said that based on the strength already seen in April, he would increase his estimate for second-quarter growth as well.
“It looks like we will get around 3.5% growth for the first half of this year, which is pretty darn good,” he said.
The 1.9% jump in durable goods orders -- the largest advance since a 2% increase in November -- followed three straight monthly declines including a sharp 1.6% drop in March.
Leading the April advance was an 8.2% surge in orders for transportation equipment, the biggest increase since November. Demand for motor vehicles and parts rose 3.4% while orders for commercial aircraft were up 28.2% and demand for military aircraft rose 26.3%.
Orders for non-defense capital goods, viewed as an indicator of business plans to expand and modernize, rose 3.8% in April, the best showing since a 7.7% surge in November.
Orders for business capital goods had been weak in the first three months of this year, reflecting the expiration at the end of last year of popular tax deductions that were designed to encourage sales of business equipment as the country struggled to emerge from the 2001 recession.
