Orders for long-lasting goods in the US probably climbed last month for a third month, and home sales figures changed little, further evidence that manufacturing is heading the recovery, economists said before reports this week.
A survey showed orders for durable goods rose 0.5 percent, based on a median of 63. This comes ahead of a Commerce Department report that is due March 24.
Combined sales of new and existing homes last month likely fell 1.2 percent to an annual rate of 5.3 million, the survey showed.
Business equipment spending, inventory restocking and a pickup in global demand are generating production gains that may help other parts of the economy accelerate.
Sustained gains in employment are the missing element needed to further broaden expansion by boosting consumer spending and housing.
LEADING THE RECOVERY
“Manufacturing is leading the recovery, while housing is clinging to stability,” said Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “An improving labor market will be key to the outlook.”
The projected rise in durable goods orders would follow a 2.6 percent jump in January that was the biggest since July 2009. Excluding transportation equipment, which includes demand for commercial aircraft that tends to be volatile, orders rose 0.6 percent after a 1 percent decline the previous month, according to the survey.
Boeing Co, the second-biggest commercial plane maker in the world, said it received 47 orders last month, up from 10 a month earlier.
Chicago-based Boeing last week said it would boost production in coming years to meet stronger demand as airlines rebound from the recession-induced travel slump.
The rebound in manufacturing has boosted shares of machinery makers this year. The S&P’s Supercomposite Industrial Machinery Index of 36 companies, including Eaton Corp and Briggs & Stratton Corp, has increased 6.8 percent this year compared with a four percent gain in the broader S&P 500.
GROWING SALES
Growing sales in the US and abroad and the need to replenish inventories are also helping companies such as Owens-Illinois Inc, the largest US maker of glass containers for food and beverages.
“We are starting to see the beginnings of a recovery, which we anticipate will extend through 2010 and 2011,” chief executive officer Al Stroucken said, in a presentation to investors on Thursday.
Stroucken said he expects “volumes to recover due to destocking having run its course.”
Stronger business investment and a bigger contribution from efforts to stabilize inventories helped the economy expand in the fourth quarter at the fastest pace in six years.
GDP probably grew at a 5.9 percent annual rate, with consumer spending increasing at a 1.7 percent pace, according to the median survey estimate before revised figures from the Commerce Department on Friday.
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