- The Washington Times - Wednesday, August 25, 2004

ASSOCIATED PRESS

Factory orders for costly manufactured goods in July recorded the biggest gain in four months. However, new-homes sales slid, according to a pair of reports that offered a mixed picture of economic activity.

The Commerce Department reported yesterday that orders for durable goods — big-ticket items expected to last at least three years — rose 1.7 percent in July from the previous month. The gain was helped by a stronger demand for airplanes, machinery and communications equipment.

The largest increase since March came after a 1.1 percent gain in June. Also, the July showing was better than the 1 percent rise that some economists had forecast.

Jerry Jasinowski, president of the National Association of Manufacturers, said the latest durables report offered “solid evidence that the manufacturing recovery is on track.”

A second report from the department showed that sales of new homes declined by a sharp 6.4 percent in July from the previous month to a seasonally adjusted annual rate of 1.13 million units. The decline, steeper than analysts expected, left home sales at their lowest level since December.

Sales in June declined 5.6 percent, according to revised figures, which showed that sales were even weaker than previously reported.

The drop in home sales comes amid a sluggish jobs climate and high energy prices, which might have made some people wary of making a big financial commitment, analysts say.

Even with the slowdown, the chief economist at the National Association of Home Builders thinks sales of both new homes and previously owned homes are still on track to reach new highs for 2004.

“There’s been some cooling, but the housing market is still in very, very good condition,” David Seiders said.

On Wall Street, the Dow Jones industrials gained 83.11 points to close at 10,181.74.

President Bush is counting on the economy to come out of the rough patch experienced in the early summer by the time that voters go to the polls in November.

Democratic rival Sen. John Kerry says that the president’s economic policies, especially his tax cuts, are flawed and mostly help the wealthy but squeeze the middle class. The Massachusetts senator also contends that Mr. Bush’s policies have not created a significant number of jobs.

The Federal Reserve, wanting to keep inflation under control, raised interest rates on Aug. 10 to 1.5 percent. The Fed took the action even though Fed Chairman Alan Greenspan had acknowledged weeks before the Fed meeting that the economy had hit a “soft patch” in June.

In the manufacturing report, orders for all transportation equipment rose 5.6 percent in July, the biggest gain since February, mostly reflecting stronger demand for airplanes. In June, transportation orders rose 4.7 percent.

Excluding orders for transportation equipment, bookings for all other goods nudged up 0.1 percent in July, an improvement from the 0.3 percent decline in June. Orders for machinery in July increased 2.1 percent, up from a 1.1 percent rise the previous month.

For communications equipment, orders rose 5.1 percent in July, compared with a 4.4 percent drop in June. Orders for electrical equipment and household appliances increased by 5 percent in July, a turnaround from the 5.5 percent decline recorded for June.

Orders for nondefense capital goods jumped 9 percent in July. That was the largest rise since July 2002 and came after a 1.1 percent advance in June. The category is watched closely by economists as an indication of businesses’ plans to boost spending on equipment and other goods to modernize.

There were some soft spots: Orders for automobiles dropped 5.3 percent in July, the largest decline in nearly a year. Orders for computers and fabricated metal products also showed declines.

In the housing report, new-home sales in July fell in every region except for the Midwest, where sales climbed to a new record annual rate of 260,000 units, representing a 21.5 percent jump from June’s level.

Sales declined 23.5 percent in the Northeast to an annual rate of 62,000. In the South, sales dropped 15.9 percent to a pace of 522,000, and in the West, they dipped 1.7 percent to a rate of 290,000.

Meanwhile, Toll Brothers Inc. said profit for its latest quarter surged 56 percent as demand for new luxury homes remained strong. The Pennsylvania-based home builder reported net income of $106 million, or $1.31 a share, for the third quarter that ended July 31, compared with $68.2 million, or 90 cents a share, a year earlier.


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