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U.S. Durable Goods Down; Housing Up

By John S. McClenahen Economists are still scrambling to come up with some really good reasons for September's unexpectedly deep plunge in new orders for commercial aircraft, machinery and other durable goods. According to data released by the U.S. Commerce Department on Oct. 25, new orders fell to $167.6 billion in September, a 5.9% decline from August and three times the percentage decrease that most economists had expected. Particularly worrisome for U.S. manufacturers is September's falloff in new orders for non-defense capital goods. Orders fell to $52.1 billion, a 12.6% decline from August and the biggest percentage decrease since December 1997. New orders for communications equipment fell to $2.58 billion, a 52% decline. The statistics underscore "some major weaknesses in our economy," says Jerry J. Jasinowski, president of the Washington, D.C.-based National Association of Manufacturers. "Even though the fundamentals of the economy are generally sound, uncertainty regarding the stock market and possible war in the Middle East continues to impede an overall investment recovery," he believes. However, uncertainty certainly is not extracting a toll from the American housing market. Sales of both new and existing single-family homes rose in September. Exceeding expectations of a 985,000-unit pace, new one-family house sales were at a seasonally adjusted annul rate of 1.021 million in September, 0.4% above the revised August rate of 1.017 million, jointly report the U.S. Commerce Department and the U.S. Department of Housing & Urban Development. They estimate 332,000 new houses across the U.S. were for sale at the end of September, just a four-month supply. Existing home sales increased 1.9% in September to a seasonally adjusted annual rate of 5.4 million, says the National Association of Realtors (NAR), Chicago. The annual rate was a bit better than the 5.35 million rate economists generally expected. "Mortgage interest rates have been on a steady slide since April and reached . . . historic lows in September, contributing significantly to higher existing home sales," explains David Lereah, NAR's chief economist. "Even in a period of economic uncertainty, buyers continue to invest in the American dream of homeownership," emphasizes Martin Edwards Jr., NAR's president and a partner in Colliers Wilkinson & Snowden Inc., Memphis.

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