U.S. factory orders, auto
sales buoy growth outlook
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[June 04, 2014]
By Lucia Mutikani
WASHINGTON (Reuters) - New
orders for U.S.-made factory goods rose for a third
straight month in April and automakers reported robust
vehicle sales in May, 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," said Gus Faucher, senior economist at PNC
Financial Services Group.
Factory orders increased 0.7 percent after an upwardly revised 1.5
percent advance in March, the Commerce Department 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 U.S. sales from automakers in May 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 <GM.N> and Chrysler Group <FIA.MI> said May sales
were the best for that month in seven years. Nissan Motor Co
<7201.T> set a sales record for May and Hyundai Motor Co <005380.KS>
had its best month ever.
"These are stunning numbers, especially since the industry is in the
midst of some massive, highly publicized recalls," said Anthony
Karydakis, chief economic strategist at Miller Tabak in New York.
"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."
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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 the jump in auto sales prompted Barclays
to raise its estimate of second-quarter U.S. growth by two-tenths of
a percentage point to a 3.0 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 one-tenth to 3.8 percent. The
U.S. economy contracted at a 1.0 percent rate in the first quarter.
Unfilled orders recorded their largest gain since November,
indicating factories will be busy in the months ahead, and shipments
rose for a third consecutive month.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci and James
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