Strong demand for US manufactured goods in February
DEMAND for long-lasting U.S. manufactured goods surged in February, suggesting factory activity continued to expand at a moderate pace, even though a gauge of planned business spending slipped.
A separate report on Tuesday showed U.S. single-family home prices started the year with the biggest annual increase in six-and-a-half years, a further sign the housing market recovery was gaining enough muscle to take over the baton from manufacturing.
The S&P/Case Shiller composite index of 20 metropolitan areas rose 8.1pc in January compared to last year, its biggest rise since June 2006. On a month-on-month basis it rose 1pc on a seasonally adjusted basis.
The Commerce Department report said durable goods orders jumped 5.7pc last month as demand for transportation equipment rebounded strongly.
The rise in durable goods orders, which range from toasters to aircraft, reversed January's 3.8pc plunge and beat economists' expectations for a 3.8p advance.
Excluding transportation, orders slipped 0.5pc after increasing 2.9pc in January.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 2.7pc, the largest decline since July.
However, the drop in these so-called core capital goods followed a 6.7pc jump in January and economists were unworried.
"To the extent that the weakness in core capital goods orders was a partial retracement of the unsustainable big gains the month before, the constructive tone in business investment over the past few months remains largely intact," said Millan Mulraine, a senior economist at TD Securities in New York.
Taking the sting from the fall in core capital goods orders, shipments increased 1.9pc. Shipments of those goods are used to calculate equipment and software spending in the gross domestic product report.
Last month's rise, which unwound a 0.7pct fall in January, suggested business spending would again contribute to growth this quarter.
Though the report was mixed, it was generally in line with other data, including industrial production and the Institute for Supply Management's survey of national factory activity, that have shown a steady growth pace in manufacturing.
Factory activity has cooled in recent months after helping to lift the economy from the 2007-09 recession, restrained by sluggish domestic demand and slowing global growth.