Solid Reports for the Economy : demoRATs can NOT dig hole to bury themselves
By JEREMY W. PETERS
Businesses placed more orders last month for heavy-duty items like machinery and electrical equipment, easing concerns that capital investment might be slowing.
Orders for durable goods rose 3.4 percent last month, to $214.9 billion — a larger figure than Wall Street expected — the Commerce Department reported today.
Over the last two months, weakening durable goods orders have raised concerns that business might be pulling back on spending. Orders plunged 8.8 percent in January and initially showed a weak gain in February. But the Commerce Department revised February’s figures up, to a gain of 2.4 percent instead of the 1.7 percent growth reported initially.
Separately, the Commerce Department released its monthly report on new home sales, which showed gains in both sales and prices. The seasonally adjusted annual sales rate for new homes rose 2.6 percent in March, to 858,000, following declines in January and February. The median price of a new home rose 6.4 percent compared with a year earlier, to $254,000.
The boost developers saw in March, however, was tempered somewhat by new data showing that sales in December, January and February were weaker than first thought. The Commerce Department said that its initial calculations overcounted the sales rates in those months by 48,000 homes.
Given the problems in the subprime mortgage market, where lenders to people with poor credit histories are tightening loan standards, economists said that the March data might not be telling the full story.
“It seems very likely that the subprime woes hitting the headlines have hurt consumer confidence, driving the number of contract cancellations higher,” Dimitry Fleming, an economist with ING Financial Markets, said in a research report.
The new home sales figures do not account for buyers who have backed out of their contracts.
The government reports released today depicted an economy that remains relatively solid despite the slowdown in housing. Yesterday, the National Association of Realtors reported the sharpest monthly drop in sales of previously owned homes since 1989.
The durable goods numbers, however, were generally strong. A statistic closely monitored by economists as a harbinger of business spending, known as the core capital goods figure, climbed 4.7 percent last month after falling in January and February. The figure does not include orders for military equipment or aircraft, and is therefore less volatile than the overall durable goods number.
“The strong gain in core capital goods orders should alleviate fears that business investment was on the cusp of spiraling downwards and contributing to a sharp near-term slowdown in business investment and real G.D.P. growth,” Brian Bethune, an economist with Global Insight, wrote in a research report. |
