Posted on 04/26/2006 7:16:51 PM PDT by Flavius
Factory Orders Jump 6.1 Percent in March; Sales of New Homes Rise 13.8 Percent in Same Period
WASHINGTON (AP) -- A jump in demand for commercial aircraft pushed orders for big-ticket manufactured goods higher in March while sales of new homes shot up at the fastest pace in 13 years, reflecting a rebound from bad weather in February.
ADVERTISEMENT click here Both reports depicted an economy continuing to expand at a healthy pace, a view supported by a new survey of business conditions around the country released Wednesday by the Federal Reserve.
The Fed's 12 regional banks used words such as "solid," and "steady" to describe the economy's performance in March and early April. The Fed did note that "higher energy prices were at the forefront of most districts' mention of cost pressures" and that was before crude oil soared to a new record of $75.17 per barrel last Friday.
Some analysts said the strong growth plus rising inflation pressures will mean the central bank's rate-setting Federal Open Market Committee will not only raise rates for a 16th time at its next meeting in May but will keep going after that.
"The U.S. economy is firing on all cylinders right now and there is little to no slack left," said Sherry Cooper, chief economist at Harris Bank in Chicago. "This makes it increasingly unlikely that the Fed will pause after the May 10 FOMC meeting."
More on the Fed's thinking may be known after Fed Chairman Ben Bernanke testifies on the economic outlook Thursday before Congress' Joint Economic Committee.
On Wall Street, the Dow Jones industrial average rose 71.24 points to close at 11,354.49, reflecting upbeat earnings reports and positive analyst comments on the restructuring of General Motors Corp.
The Commerce Department reported that sales of new single-family homes rose 13.8 percent last month to a seasonally adjusted annual sales rate of 1.213 million units. The increase represented a recovery from a 10.9 percent plunge in sales in February.
But the median price of homes sold in March dropped to $224,200, down 2.2 percent from what homes were selling for in March 2005. It marked the first time home prices dropped over a 12-month period since December 2003.
Home prices last year were soaring as anxious buyers bid more to get into a sizzling home market. However, analysts believe that sales, which set records for five straight years, will decline in 2006 by around 10 percent under the impact of rising mortgage rates.
"With interest rates continuing to rise, all signs point to a further weakening in sales just down the road," said Patrick Newport, an economist at Global Insight, another forecasting firm.
Rates on 30-year mortgages rose last week to 6.53 percent, the highest level in nearly four years, with economists forecasting they could be around 7 percent by the end of this year.
Home sales were up in all areas of the country in March led by a 35.7 percent surge in the West, followed by gains of 10.9 percent in the Midwest, 6.9 percent in the South and 4.7 percent in the Northeast.
The government also reported that orders to U.S. factories for big-ticket manufactured goods soared by 6.1 percent in March, the biggest gain in 10 months. Two-thirds of the increase reflected a 71.1 percent jump in demand for commercial aircraft,
The overall increase, which followed a 3.4 percent February advance, was more than three times the advance Wall Street had been expecting. Manufacturing is expected to remain strong in coming months as businesses restock lean inventories and boost spending to expand and modernize.
"Businesses remain confident in the economic outlook and are committing to significant capital investments," said David Huether, the National Association of Manufacturers' chief economist.
In contrast to the big surge in new home sales in March, sales of previously owned homes edged up a much smaller 0.3 percent, according to a report Tuesday from the National Association of Realtors.
Both reports, however, showed that the number of unsold homes on the market at the end of the month rose to record levels, a development that was expected to depress price gains in coming months.
The number of new homes remaining on the market in March rose to a record 555,000, up 2.8 percent from February.
New home sales: http://www.census.gov/newhomesales
Durable goods report: http://www.census.gov/m3
Federal Reserve survey: http://www.federalreserve.gov
i'm sure msm will jump right in
All the factory orders are merely for hamburger-flipping spatulas! All the new houses are made of hamburgers!
IBBF! (In Before Bush's Fault)
Bubble-boy ex-Texan is on death watch.
".. sales of new homes shot up at the fastest pace in 13 years..."
More owners of private property equals more people telling the criminal fascist syndicate occupying Washington to leave us alone....or else.
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