factory, confidence data boost growth prospects
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[May 28, 2014]
By Lucia Mutikani
WASHINGTON, May 27
(Reuters) - Orders for long-lasting U.S. manufactured
goods unexpectedly rose in April and consumer confidence
perked up in May, supporting views of a rebound in
Other data on Tuesday showed home prices moving higher in March and
services industries, which dominate the economy, growing at a fast
clip in May.
"It appears that the economy continues to bounce back from the harsh
winter," said John Ryding, chief economist at RDQ Economics in New
Orders for durable goods, items ranging from toasters to aircraft
that are meant to last three years or more, climbed 0.8 percent last
month after an upwardly revised 3.6 percent gain in March, the
Commerce Department said.
Demand for defense capital goods surged and orders for fabricated
metal products, transportation gear and electrical equipment,
appliances and components all rose.
While non-defense capital goods orders excluding aircraft, a closely
watched proxy for business spending plans, fell 1.2 percent, the
March reading on these so-called core capital goods was revised
sharply higher to show a 4.7 percent gain - the largest since
"The large upward revision hints at a stronger handoff into the
second quarter," said Gennadiy Goldberg, an economist at TD
Securities in New York. "The data is indicative of a pickup in
capital investment activity during the spring."
Separately, the Conference Board said its index of consumer
attitudes rose to 83 in May from 81.7 in April as households' labor
market views improved. Rising household optimism should boost
consumer spending, which accounts for more than two-thirds of U.S.
HOUSE PRICES RISE
Another report showed house prices continued to appreciate in March.
The pace, however, is moderating. That could help the market, where
rising prices and mortgage rates have undercut sales. The Standard &
Poor's/Case Shiller gauge of prices in 20 metropolitan areas rose
12.4 percent in March from a year ago.
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The reports helped to lift U.S. stocks and push the Standard &
Poor's 500 index to a record high. Prices for U.S. Treasury debt
fell. The dollar was flat against a basket of currencies.
Core capital goods shipments, which are used to calculate equipment
spending in the government's GDP measurement, fell 0.4 percent last
month after rising 2.1 percent in March.
At the same time, durable goods inventories rose only 0.1 percent,
suggesting little inventory growth in the second quarter. Morgan
Stanley lowered its second-quarter growth estimate to an annual pace
of 3.7 percent from 3.9 percent.
Orders for defense capital goods jumped 39.3 percent, the largest
rise since December 2012, and unfilled orders rose solidly, a sign
factory activity will continue to push ahead.
Separately, financial data firm Markit said its "flash" services
Purchasing Managers Index rose to 58.4 in May from 55.0 in April. A
reading above 50 signals expansion in services sector activity.
(Reporting by Lucia Mutikani; Additional reporting by Sam Forgione
in New York; Editing by Andrea Ricci)
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