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U.S. Big-Ticket Orders Shoot Higher

By Agence France-Presse A long-awaited recovery in U.S. investment may finally have begun, experts said May 23, after orders for big-ticket items shot up 1.1% in April. "It looks like we have the turn in orders for durable goods and therefore in investment," said Naroff Economic Advisors chief economist Joel Naroff. "This key component of the economy had been in free-fall for quite a while, but that is no longer the case, as orders rose a solid 1.1%." Excluding volatile orders for aircraft, which slumped a dramatic 37%, orders for U.S. durable goods climbed a "robust" 2.9%, experts noted. "Importantly, the gains were broad based, as almost every sector reported demand had increased," Naroff said. Metals, machinery, electronic and electrical equipment, motor vehicles and even communications equipment posted solid gains, according to figures released by the U.S. Commerce Department. It was the fifth monthly increase in durable goods orders and it followed a rise of 0.2% in March. "Business investment is the sensitive sector of the U.S. economy and the more upbeat news goes far in reinforcing expectations of a recovery," said Societe Generale chief economist Marc Hendriks. Naroff noted that unfilled orders fell 0.5% in April. "For production to truly surge, we need to see order books refilling rapidly and that is not happening," Naroff said. "Thus, while the manufacturing sector is coming back, it still has a way to go before it can be said to be totally out of the woods." Orders for capital goods slumped 3.7% in April. But within that category, orders for non-defense capital goods, often an indication of business plans to expand and modernize, rose 1.9%. Machinery orders rose 4%. Computers and electronic products orders advanced 2.5% -- the biggest increase since October of last year. Defense capital goods orders slumped 33.3% after a sharp rise in March. In the labor market, meanwhile, the number of people filing new claims for U.S. jobless benefits tumbled 9,000 to a seasonally adjusted 416,000 in the week ended May 18, the Labor Department said. The pool of existing claimants, however, surged to a new 19-year high of 3.87 million. "This report is consistent with our forecast for tepid job growth of 50,000 in May and a 6.1% unemployment rate," said Merrill Lynch economist Gerald Cohen. The U.S. unemployment rate hit an eight-year high of 6% in April. Copyright Agence France-Presse, 2002

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