Durable-Goods Orders, New Home Sales Signal Continuing Recovery

By John S. McClenahen The latest data on orders for manufactured durable goods -- the stuff that lasts a relatively long time -- and sales of new homes suggest the U.S. recovery from recession may be a bit stronger than the most recent Conference Board Consumer Confidence Index implies. That closely watched index fell nearly four percentage points in June. Excluding semiconductors, new orders for durables rose 0.6% in May to $173.2 billion, reports the U.S. Commerce Department's Bureau of the Census. That figure was right in line with most economists' expectations and significantly better than April's 0.4% advance. "The durable-goods report confirms that the manufacturing sector continues on a recovery track," says Daniel J. Meckstroth, chief economist at Manufacturers Alliance/MAPI, an Arlington, Va.-based business research group. "The materials industries -- metals and metal products -- have recently experienced relatively strong growth in new orders, as have the high-tech computer and related products industry," he notes. What's more, Meckstroth expects inventory liquidation among manufacturers to end soon, and "that will further boost business activity this summer," he says. Meanwhile, sales of new single-family homes in May were at a seasonally adjusted rate of 1.028 million, reveals a report jointly released by the Census Bureau and the U.S. Department of Housing and Urban Development. The May mark was 8.1% higher than the revised April rate of 951,000 and 11.7% higher than the consensus forecast of 920,000 for May. The median sales price for new homes sold in May was $170,200; the average sales price was $224,300. At month's end, an estimated 324,000 homes remained for sale, a 3.8 month supply at the current sales rate.

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