Orders for durable goods recorded a third straight gain last month, the longest streak in almost two years, confirming that manufacturers will help buoy the economy.
Demand for goods meant to last several years rose 0.6 percent after a revised 5-percent increase in March that was larger than previously estimated, the U.S. Commerce Department said last Thursday in Washington, D.C. (READ MORE)
Separately, the U.S. Labor Department said the average of first-time claims for jobless benefits in the previous four weeks had fallen to 302,750, the lowest in more than a year.
The reports indicate that manufacturers are growing more confident after the economy slowed to its weakest pace in four years last quarter. Federal Reserve policymakers have cited capital spending, along with housing, as a key risk for the expansion this year.
A separate release Thursday was expected to show that sales of new homes held near a seven-year low. [Editor’s note: Instead, the Census Bureau report on Thursday showed new-home sales surging last month by 16.2 percent (READ MORE), based on contracts signed in April, while a report the next day by the National Realtors Association found that sales of existing homes fell last month by 2.7 percent (READ MORE). The two reports do not necessarily conflict; existing-home sales are registered at time of closing, usually a month or two after the contract is signed.]
“The reports show a healthy expansion in terms of hiring and spending,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York who used to work at the Fed. “Housing has been the sick man of the economy, but we’re seeing that growth can pull through even with housing as sick as it’s been.”
Excluding transportation equipment, orders for American-made durable goods rose a greater-than-forecast 1.5 percent for a second month.
Initial jobless claims rose by 15,000 to 311,000 in the week ended May 19, the Labor Department said. The four-week average fell from 306,300 the previous week. So far this year, weekly jobless claims have averaged 319,500, compared with 313,000 for all of last year.
The yield on 10-year Treasury securities had reached their highest point since Jan. 31 on Wednesday, touching 4.9 percent, but after the reports they dropped slightly, to 4.86 percent as of Thursday morning.
“The Fed forecast is for a moderate pace of growth, and these reports suggest that,” said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis. “The rebound in production and orders continues, and we have a real solid, steady labor market.”
Economists had forecast durable goods orders would rise 1 percent, after an initially reported 4.3 percent jump in March, according to the median of 74 forecasts in a Bloomberg News survey. The estimates ranged from a decline of 2 percent to an increase of 3.1 percent.
