New orders for US-made factory goods rose for a third straight month in April and automakers reported robust vehicle sales last month, boosting the outlook for second-quarter economic growth.
Tuesday’s reports added to bullish employment and other manufacturing data in suggesting the economy has rebounded smartly from the first quarter’s weather-induced slump.
“This is consistent with other data showing growth bouncing back in the second quarter. Everything looks set for solid growth in the second half of this year,” PNC Financial Services Group senior economist Gus Faucher said.
Factory orders increased 0.7 percent after an upwardly revised 1.5 percent advance in March, the US Department of Commerce said.
March’s orders had previously been reported as having risen 0.9 percent.
Excluding the volatile transportation category, orders rose 0.5 percent, the third straight monthly gain.
Surprisingly strong US sales from automakers last month bolstered the upbeat view on the factory sector and suggested manufacturing was poised for further growth.
Auto sales surged 11.4 percent from a year earlier to a seasonally adjusted annual 16.77 million unit rate, the strongest pace since February 2007, according to research firm Autodata.
General Motors Co and Chrysler Group said May sales were the best for that month in seven years. Nissan Motor Co set a sales record for May and Hyundai Motor Co had its best month ever.
“These are stunning numbers, especially since the industry is in the midst of some massive, highly publicized recalls,” New York-based Miller Tabak chief economic strategist Anthony Karydakis said. “We would view this as a strong sign of a consumer sector emerging more confident with pivotal positive implications for spending and growth later in the year.”
The economy should also get a lift as businesses rebuild inventories after hunkering down in the first quarter to work through piles of stocks accumulated late last year.
Factory inventories rose 0.4 percent in April.
The rise in inventories and auto sales prompted Barclays to raise its estimate of second-quarter US growth by 0.2 percentage points to a 3 percent annual rate.
Forecasting firm Macroeconomic Advisers lifted its forecast to 3.9 percent from 3.8 percent, based on factory inventories, while Goldman Sachs upped its estimate by 0.1 percentage points to 3.8 percent. The US economy contracted at a 1 percent rate in the first quarter.
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