Martin Crutsinger

US durable goods orders up 0.2 percent in April

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US durable goods orders up 0.2 percent in AprilIn this April 27, 2012, photo, Mike Cline, Samsung home appliances representative, cleans a washer at a Lowe's store in Omaha, Neb. Orders for durable goods increased a slight 0.2 per cent last month after a 3.7 per cent decline in March, the Commerce Department said Thursday, May 24, 2012. (AP Photo/Nati Harnik)(Credit: AP)

WASHINGTON (AP) — Orders for long-lasting factory goods edged up slightly in April. But a measure of tracks business investment spending fell for a second straight month.

Durable goods orders increased 0.2 percent last month after a 3.7 percent decline in March, the Commerce Department said Thursday. Gains in volatile commercial aircraft orders and more demand for autos and parts drove the modest increase.

So-called core capital goods orders, which are considered a proxy for business investment plans, fell 1.9 percent in April after a 2.2 percent decline in March. Demand for computers and electronics products and heavy machinery fell.

Durable goods are items expected to last at least three years. Orders rose in April to $215.5 billion, up 52.5 percent from their recession low hit in the spring of 2009. Orders are still 11.6 percent below their peak in December 2007.

The decline in core capital goods could suggest that second-quarter growth is off to a slow start. Still, orders tend to fluctuate sharply from month to month.

Many economists approached Thursday’s report cautiously. They noted that the findings conflicted with two other reports that suggest factory activity and production grew last month.

The Institute for Supply Management said factory activity grew in April at the fastest pace in 10 months. The group’s closely watched manufacturing index showed strength in new orders, production and hiring.

And the Federal Reserve reported that U.S. factory output rose 0.6 percent in April. Half of that increase reflected a big jump in production of motor vehicles and parts.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said that the weakness could be the result of lingering effect of the expiration of favorable business investment tax breaks at the end of last year.

“This is disappointing, but given the volatility of the data and the strength of the ISM new orders in manufacturing, not disastrous,” Shepherdson said.

Manufacturing has been a leading source of growth and jobs since the recession ended. Economists believe that trend will continue.

For April, orders for transportation goods rose 2.1 percent, led by a 7.2 percent increase in demand for commercial aircraft. This volatile category had plunged 46.6 percent in March.

Orders for autos and auto parts rose 5.6 percent, reflecting the continued strong demand automakers are seeing.

Excluding transportation, durable goods orders fell 0.6 percent following a 0.8 percent drop in March.

Orders for heavy machinery dropped 2.8 percent, while demand for computers and other electronics products fell 0.6 percent.

US 30-year mortgage rate falls to record 3.78 pct.

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WASHINGTON (AP) — The average U.S. rate for the 30-year fixed mortgage fell to a record low for a fourth straight week. Cheap mortgages have helped boost home sales modestly this year.

Mortgage buyer Freddie Mac says the rates on the 30-year loan dipped to 3.78 percent. That’s down from 3.79 percent last week and the lowest since long-term mortgages began in the 1950s.

The 15-year mortgage, a popular option for refinancing, held steady at 3.04, matching the record low hit last week.

Rates on the 30-year loan have been below 4 percent since early December. The low rates are a key reason the housing industry is flashing signs of a recovery five years after the bubble burst.

In April, sales of both previously occupied homes and new homes rose near two-year highs.

US sales of previously occupied homes up in April

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WASHINGTON (AP) — Americans bought more previously owned homes in April, a hopeful sign that the weak housing market is gradually improving.

The National Association of Realtors says home sales rose 3.4 percent last month to a seasonally adjusted annual rate of 4.62 million.

That brings home sales back near the pace in January and February — which was the best winter for sales in five years. Still, sales are well below the nearly 6 million per year that economists equate with healthy markets.

A mild winter encouraged some people to buy homes earlier. That drove up sales in January and February, while making March weaker.

The median price for homes sold in April rose to $177,400, up 10.1 percent from a year ago.

Modest increases in home sales are the latest sign that the market could be starting to turn around nearly five years after the housing bubble burst.

The sales pace in January was the highest since May 2010 — when a popular home-buying tax credit expired. Builders are more confident and are starting to builder more homes. Mortgage rates have never been cheaper. And the job market is improving, which has made more people open to buying a home.

Employers have added 1 million jobs in the past five months. And unemployment has dropped a full percentage point since August, from 9.1 percent to 8.1 percent in April.

Still, many would-be buyers are having difficulty qualifying for home loans or can’t afford the larger down payments being required by banks.

Even some would-be home buyers are holding off because they fear that home prices could keep falling.

Previously occupied homes represent 80 percent of the overall home market.

Builders have grown more confident since last fall, in part because more people have expressed an interest in buying a home. In May, builder optimism rose to the highest level in five years, according to the National Association of Home Builders/Wells Fargo builder sentiment index.

Last week, the Commerce Department reported that builders started work on more homes and apartments in April, pushing housing construction to a seasonally adjusted annual rate of 717,000 homes. That was near a rate of 720,000 homes and apartments being built in January, which had been a three-year high. But even with the recent strength, housing construction remains at roughly half the pace that economists consider a healthy market.

Many economists believe that 2012 could be the year that housing finally makes a positive contribution to overall economic growth. That hasn’t happened since 2005, shortly before the housing boom went bust.

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Gauge of US economy dipped 0.1 percent in April

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WASHINGTON (AP) — A measure of future U.S. economic activity fell in April after six months of increases. The drop reflected weakness in housing and hiring.

The Conference Board says its index of leading economic indicators declined 0.1 percent in April from March.

The index now stands at 95.5. That’s down slightly from a March reading of 95.6, which had been the highest level since mid-2008. Before the recession began in December 2007, the index routinely topped 100.

Conference Board economist Ken Goldstein says the April setback reflected an economy that is still struggling to gain momentum.

US business stockpiles grew 0.3 percent in March

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US business stockpiles grew 0.3 percent in MarchFILE - This Jan. 25, 2012 file photo shows hydraulic couplings ready for shipping at the Eaton Corp. plant in Berea, Ohio. U.S. companies restocked more slowly in March, continuing a trend that has weighed on growth this year. The Commerce Department said Tuesday, May 15, 2012, that business inventories rose 0.3 percent in March, the smallest increase since November. Business sales rose 0.6 percent in March. (AP Photo/Mark Duncan, File)(Credit: AP)

WASHINGTON (AP) — U.S. companies restocked more slowly in March, continuing a trend that has weighed on growth this year.

The Commerce Department said Tuesday that business inventories rose 0.3 percent in March, the smallest increase since November. Business sales rose 0.6 percent in March.

The pace of restocking has diminished this year from the end of last year, contributing less to economic growth in the January-March quarter.

Businesses order more goods when they increase their stockpiles. That supports higher factory production and faster economic growth.

Stockpiles have remained lean relative to sales. The inventory-to-sales ratio dipped to 1.27 in March, meaning it would take roughly five weeks to exhaust the stockpiles at the March sales pace.

Inventories are expected to keep growing this year. But the gains are not expected to be anywhere near the level seen at the end of last year.

That’s because businesses had cut back on restocking last summer when some feared the economy was on the verge of another recession. When it became clear that it wasn’t, many companies raced to rebuild their stockpiles and keep pace with consumer demand.

Sales were up strongly in February and March, but that reflected in part a mild winter that may have accelerated some sales at the expense of later months. A separate report Tuesday showed that retail sales barely increased in April.

Economists believe the pace of inventory rebuilding is consistent with moderate economic growth. Still, consumers must keep spending for businesses to continue restocking at a healthy pace.

In the first three months of this year, the economy grew at an annual rate of 2.2 percent. That’s down from the 3 percent growth in the October-December quarter but better than the 1.7 percent growth for all of 2011. And it was driven by the fastest growth in consumer spending since late 2010.

Consumers spent more partly in response to strong hiring. But hiring slowed sharply in the past two months. Employers added an average of 135,000 jobs per month in March and April. That’s down from an average 252,000 per month from December through February.

Sluggish job growth and weak pay raises threaten to drag on consumer spending. That would drag on growth. Consumer spending accounts for 70 percent of economic activity.

Stockpiles at the manufacturing level account for about 40 percent of the total while wholesale inventories represent 27 percent and inventories at the retail level account for about one-third of the total.

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US wholesale prices fell 0.2 percent in April

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WASHINGTON (AP) — U.S. wholesale prices fell in April, reflecting a big decline in gas and energy costs. But outside that drop, inflation was tame.

The Labor Department says the producer price index, which measures price changes before they reach the consumer, dropped 0.2 percent in April. It was the first decline since December and the biggest drop since October.

Excluding volatile food and energy costs, the so-called core index rose 0.2 percent.

For the 12 months that ended in April, wholesale prices have risen just 1.9 percent, the smallest 12-month change since October 2009.

Modest wholesale inflation reduces pressure on manufacturers and retailers to raise prices. That helps keep consumer prices stable.

Gas prices spiked earlier this year. But they have dropped 5 percent since peaking last month.

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