Bookings (DGNOCHNG) for long-lasting goods advanced 3 percent after rising 4.3 percent the prior month, the biggest back-to-back gains in almost a year, according to Commerce Department data today inWashington. Other reports showed indexes of leading indicators and consumer comfort improved, jobless claims rose from an almost four-year low and sales of new houses dropped.
Growing demand for raw materials from emerging markets and the need to replenish depleted inventories and update equipment are swelling order backlogs at manufacturers like Caterpillar Inc. (CAT)which will keep spurring production. Combined with fewer firings and added confidence, the gains may help shield the U.S. from a slowdown in Europe caused by the region’s debt crisis.
“We’re poised for a bounce-back in the first quarter in terms of business spending,” said Scott Anderson, a senior economist at Wells Fargo Securities LLC in Minneapolis. “Confidence is up, and there are some signs that the labor market is improving. We’re still facing issues with housing.”
Economists projected a 2 percent increase in demand for durable goods, which are those made to last at least three years, according to the median forecast of 78 economists surveyed by Bloomberg News. Estimates ranged from a drop of 2.8 percent to an increase of 6.7 percent.
Orders climbed 10 percent last year after a 15.5 percent gain in 2010.
Shares Fall
Stocks fell, reversing a rally that sent the Dow Jones Industrial Averagetoward its highest level since 2008 earlier, as banks tumbled. Thestock index dropped 0.2 percent to 12,734.63 at the close in New York. The Standard & Poor’s Supercomposite Machinery Index decreased less than 0.1 percent.
Elsewhere today, surveys showed German and French consumers are growing more confident, suggesting household spending may temper the slowdown in Europe’s two largest economies.
In Asia, South Korea’s economy grew the least in two years in the fourth quarter as exports sank because of Europe’s sovereign debt crisis and a slowing global expansion.
The risks from overseas are one reason Federal Reserve policy makers yesterday indicated that they’ll keep interest rates low though 2014, extending a prior pledge from mid 2013.
Fed’s View
“Strains in global financial markets continue to pose significant downside risks to the economic outlook,” policy makers said in a statement after keeping interest rates near zero.
Other reports in the U.S. today showed the economy will keep growing. The index of leading indicators rose in December for a third month, according to a report from the New York-based Conference Board. The research group’s gauge of the outlook for the next three to six months increased 0.4 percent after climbing 0.2 percent in November.
Data from the Labor Department showed jobless claims rose last week, displaying the usual volatility around holidays. Applications for unemployment benefits rose by 21,000 to 377,000 in the week ended Jan. 21. The prior week’s 356,000 was the lowest since April 2008.
Also today, the Bloomberg Consumer Comfort (COMFCOMF) Index improved to minus 46.4 in the week ended Jan. 22 from minus 47.4 the prior period. All three components of the gauge, including measures on the current state of the economy, buying climate and personal finances, climbed.
Unfilled Orders
The durable goods report showed unfilled orders increased 1.5 percent, the biggest jump since March 2008 and a sign assembly lines will keep humming.
Caterpillar, the largest construction and mining-equipment maker, posted fourth-quarter earnings and forecast full-year profit that topped analysts’ estimates as demand rose for earth- moving machinery and trucks. The Peoria, Illinois-based company said it had a record $29.8 billion backlog of orders at the end of 2011.
“We’re very tight on production capacity for many of our products and are continuing to invest in new and existing factories,” Chief Executive Officer Doug Oberhelman said in a statement.
Homebuilding is one area of the economy that will take more time to recover. Sales of new houses unexpectedly declined in December for the first time in four months, capping the slowest year on record for the industry.
Home Sales
Purchases (NHSLTOT) of single-family properties decreased 2.2 percent from the prior month to a 307,000 annual pace, figures from the Commerce Department showed today. Builders sold 302,000 homes last year, down 6.2 percent from 2010 and marking the worst year in data going back to 1963.
Following a lull in 2011, a wave of foreclosures may delay the recovery in residential construction as more distressed properties are put on the market.
“Builders continue to contend with a number of existing homes that are deeply discounted,” saidAnika Khan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We’re expecting a bit of a pickup in 2012, but we won’t see a meaningful increase as long as new homes are competing with those existing homes.”
A report tomorrow from the Commerce Department may show the economy grew at a 3 percent annual rate from October through December, up from a 1.8 percent pace in the previous three months and the best performance in more than a year, according to the median estimate of economists surveyed by Bloomberg.
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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