Durables, New Homes Exceed Expectations

ByJohn S. McClenahen Two key U.S. economic indicators -- new orders for durables and sales of new single-family homes -- exceeded economists' expectations in June, additional signs that recovery from recession may be gathering momentum. New orders for airplanes, cars, computers, machinery and other durable goods -- things designed to last three years or more -- rose 2.1% in June to $172.5 billion, says the U.S. Commerce Department. Economists generally had expected a 1.4% increase. "After three years of weakness in manufacturing and the loss of more than 2.6 million manufacturing jobs, the sun is breaking through at last," says Jerry J. Jasinowski, president of the Washington, D.C.-based National Association of Manufacturers. "The strong increase in durable good orders last month is the best performance in five months and suggests that a pick-up in business investment is in the making." According to the Commerce Department and the U.S. Department of Housing & Urban Development, sales of new one-family houses were at a seasonally adjusted annual rate of 1.16 million in June, a bit higher than the consensus forecast of 1.11 million. Last month's figure is 4.7% higher than the revised May rate of 1.108 million and 21% higher than the June 2002 rate of 959,000. Sales of existing homes in June fell below the consensus forecast seasonally adjusted annual rate of 5.98 million units. But June's rate of 5.83 million units, down 0.3% from the revised rate of 5.85 million units for May, still was the fourth best monthly showing on record, says the Chicago-based National Association of Realtors (NAR). David Lereah, the group's chief economist, continues to forecast a record rate for existing-home sales this year.