WRAPUP 2-Strong durable goods orders buoy U.S. growth outlook
(Adds details, new analyst comments, updates markets)
* Durable goods orders rise 2.6 percent in March
* Core capital goods orders increase 2.2 percent
* Orders rise across all categories
* Weekly jobless claims up 24,000, four-week average up modestly
WASHINGTON, April 24 (Reuters) - Orders for long-lasting U.S. manufactured goods rose more than expected in March and a measure of business capital spending plans surged, bolstering views of an acceleration in growth in the second quarter.
The economy stumbled at the start of the year as abnormally cold weather disrupted activity. Thursday's robust durable goods report was the latest confirmation it was out of hibernation.
"The economic expansion is moving along at a solid pace. We don't see a lot of clouds on the horizon right now," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
Orders for durable goods, items meant to last three years or more, increased 2.6 percent last month as demand rose across all categories, the Commerce Department said. That followed a 2.1 percent increase in February and beat economists' expectations for a 2.0 percent gain.
The report fit in with other data such as industrial production, retail sales and employment, that have suggested the economy gained steam as the troubled first quarter came to an end.
Growth in the first three months of this year is forecast to have braked sharply because of the harsh weather and an inventory overhang from last year that forced businesses to place fewer orders for goods with manufacturers.
The end of long-term unemployment benefits and cuts to food stamps have also robbed the economy of momentum.
While first-quarter gross domestic product growth is estimated at around a 1.5 percent annual rate, forecasts for the April-June period are above a 3 percent pace. The economy grew at a 2.6 percent rate in the fourth quarter.
U.S. financial markets were little moved by the data as investors kept a wary eye on the rising tensions in Ukraine.
ROBUST SECOND-HALF GROWTH
The durable goods report showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 2.2 percent in March after falling 1.1 percent the prior month.
Economists had expected orders for these so-called core capital goods to increase 1.5 percent last month.
"This marks an important shift in the recovery to date, and provides some of our optimism regarding the outlook for both a catch-up in growth from a harsh winter and a more robust recovery in the second half of the year," said Diane Swonk, chief economist at Mesirow Financial in Chicago.
Core capital goods shipments, which are used to calculate equipment spending in the government's GDP measurement, rose 1.0 percent. They had increased 0.7 percent in February.
A strengthening manufacturing sector should help offset housing weakness and allow the Federal Reserve to continue reducing the amount of money it is pumping into the economy through monthly bond purchases.
The U.S. central bank, which meets next week, is not expected to start raising benchmark interest rates before the second half of 2015.
A separate report from the Labor Department showed initial claims for state unemployment benefits rose 24,000 to a seasonally adjusted 329,000 for the week ended April 19
Economists, however, said the increase likely reflected difficulties adjusting the data for seasonal fluctuations given a late Easter this year and did not mark a shift in the labor market's recovery.
"The data are still consistent with healthy jobs growth. The broader labor market picture has not changed materially and we are expecting another firm employment print in April," said Yelena Shulyatyeva, an economist at BNP Paribas in New York.
The four-week moving average for new claims, considered a better measure of underlying conditions as it irons out week-to-week volatility, rose only 4,750 to 316,750. That was not too far from pre-recession levels.
The number of Americans still receiving benefits after an initial week of aid in the week ended April 12 was the lowest since December 2007. That period coincides with the monthly survey of households that the government uses to calculate the nation's unemployment rate.
Continuing claims declined between the March and April survey periods, suggesting the jobless rate could fall this month from 6.7 percent in March. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)
- Canada's parliament attacked, soldier fatally shot nearby |
- NOAA employee charged with stealing U.S. dam information
- Sweden gets two new sightings, as hunt for undersea intruder goes on
- Canada probes Michael Zehaf-Bibeau as possible suspect in Ottawa shooting: source
- Special Report: Traffickers use abductions, prison ships to feed Asian slave trade