orders for durable goods in u.s. increase more than forecast – bloomberg
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7/29/2019 Orders for Durable Goods in U.S. Increase More Than Forecast Bloomberg
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Orders for Durable Goods in U.S. Increase More Than
Forecast Bloomberg
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Orders for U.S. durable goods climbed more than forecast in February as companies looked
past budget squabbles in Washington and focused on expanding capacity to meet growing
demand.
Bookings (DGNOCHNG) for goods meant to last at least three years rose 5.7 percent, the most
since September, after a 3.8 percent drop the prior month, the Commerce Department said
today in Washington. Other reports showed sales of new homes in February capped the best
two months since 2008 and residential real- estate prices rose in January by the most since
June 2006.
Stocks advanced on expectations that gains in auto and home purchases may keep benefiting
manufacturers from 3M Co. (MMM) to United Technologies Corp. (UTX), leading to increases in
output that are boosting growth. Households are also poised to keep spending as rising
property values help repair finances tattered by the recession even as concern aboutgovernment budget cuts shakes Americans sentiment.
Businesses are feeling a bit more confident about the economy, especially the second half,
said Michael Carey, chief economist for North America at Credit Agricole CIB in New York, who
projected a 6 percent gain in durable-goods orders. The broader economy is continuing to
move forward.
The Standard & Poors 500 Index climbed 0.8 percent to 1,563.77 at the close in New York,
within two pints of its record.
Elsewhere today, a report showed South Koreas economy expanded last quarter at the
slowest pace since the global recession, underscoring the case for additional stimulus.
Survey Results
The median forecast of 80 economists surveyed by Bloomberg called for a 3.9 percent increase
in durable-goods orders. Estimates ranged from a 0.1 percent drop to a 6.5 percent gain.
Sales (NHSLTOT) of newly built homes fell 4.6 percent in February to a 411,000 annualized
rate, following a 431,000 pace the prior month, another report from the Commerce Department
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showed. It was the best two-month showing since August and September 2008.
Residential property values in 20 cities increased 8.1 percent in January from the same time last
year, the biggest 12- month gain since June 2006, according to data from S&P/Case- Shiller
also issued today. The advance exceeded the 7.9 percent median forecast by economists in aBloomberg survey.
The reports indicate manufacturing and housing were picking up heading into the automatic
across-the-board federal spending cuts that began taking place on March 1 as part of the 2011
deal to increase the U.S. debt limit.
Greatest Danger
The reductions, known as sequestration, combined with other forms of fiscal tightening including
the increase in the payroll tax, represent the greatest danger to growth, Federal ReserveBank of New York President William C. Dudley said yesterday in a speech.
Households are showing concern that the budget cuts will hurt growth. The Conference
Boards consumer confidenceindex slumped to 59.7 from a three-month high of 68 in February,
data from the New York-based private research group showed today. Economists surveyed by
Bloomberg projected the March measure would fall to 67.5.
The recent sequester has created uncertainty regarding the economic outlook and as a result,
consumers are less confident, said Lynn Franco, director of economic indicators at the
Conference Board, said in a statement.
Other measures of consumer confidence have been more mixed. The Bloomberg Consumer
Comfort monthly gauge of expectations improved to minus 4 in March from minus 7 in February,
according to results of the Bloomberg Consumer Comfort Index. The weekly measure of present
conditions climbed in mid March to the highest level since April.
Raising Forecasts
Some economists raised their tracking estimates for first- quarter economic growth after thedurable goods report pointed to gains in business investment. Michael Feroli, chief U.S.
economist at JPMorgan Chase & Co., lifted the projection to a 2.7 percent annualized rate from
2.3 percent. Peter Newland, a New York-based economist for Barclays Plc, increased it to 2.6
percent from 2.5 percent.
The worlds largest economy grew at a 0.1 percent pace in the last three months of 2012,
depressed by the biggest drop in federal military spending since the end of the Vietnam War
era, according to figures from the Commerce Department. Revised data in two days may show
a 0.5 percent gain, reflecting less deceleration in inventory building, according to economists
surveyed by Bloomberg.
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Orders (CGNOXAI%) for non-defense capital goods excluding aircraft, a proxy for future
business investment in items like computers, engines and communications gear, decreased 2.7
percent after jumping 6.7 percent the previous month. The surge in January was the biggest
since March 2010.
Unfilled Orders
Unfilled orders for this category climbed 0.2 percent even with the decrease in bookings last
month, indicating manufacturers are struggling to keep up with demand.
Shipments (CGSHXAI%) of those goods, used in calculating gross domestic product, climbed
1.9 percent after falling 0.7 percent in January, less than previously estimated. Sales of the
products were up at a 7.8 percent annualized pace in February over the past three months,
compared with a 5.1 percent gain in December, signaling business spending is growing this
quarter.
3M, the St. Paul, Minnesota-based maker of products ranging from Scotch tape to dental
braces, is among companies saying growth in the U.S. will help cushion weakness in markets
like Europe, especially in consumer electronics.
Were operating pretty steady in the U.S. and Latin America, David Meline, chief financial
officer, said at a March 21 conference. In Asia, its more mixed. Western Europe continues to
have a number of challenges.
Sustained Expansion
While cuts in U.S. military spending may trim its profits, United Technologies, the maker of Pratt
& Whitney jet engines and Otis elevators, said it expects the expansion will remain intact.
The U.S. economy is better and it is going to continue to get better, Gregory Hayes, chief
financial officer at Hartford, Connecticut-based United Technologies, said at a March 14 analyst
meeting. Weve got another year-and-a-half or so probably of low interest-rate environment,
which we could hope to capitalize on.
To contact the reporter on this story: Shobhana Chandra in Washington
To contact the editor responsible for this story: Christopher Wellisz at [email protected]
Enlarge image
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Orders for Durable Goods in U.S. Increase More Than Forecast
Tim Boyle/Bloomberg
Gains in auto and home purchases may keep benefiting manufacturers from 3M Co. to United
Technologies Corp., leading to increases in output that are giving the economy a lift.
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Gains in auto and home purchases may keep benefiting manufacturers from 3M Co. to United
Technologies Corp., leading to increases in output that are giving the economy a lift.Photographer: Tim Boyle/Bloomberg
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