US durable goods orders up more than expected

WASHINGTON - New orders for US-made durable goods jumped more than expected in April but registered a surprise drop when a big rebound in transportation orders was stripped out, a government report showed.

Orders for durable goods -- big-ticket items meant to last three years or more -- climbed 1.9 per cent in April, but were down 0.2 per cent excluding the volatile transportation category.

The report suggested a patchy economy, with orders moving ahead in areas including computers but declining in segments such as communications equipment.

"The report is kind of a mixed bag, with the headline number coming in stronger than expected, but the ex-transportation is off pretty sharply and that's a little disappointing," said Omer Esiner, a market analyst for Ruesch International in Washington.

New home sales notched a fresh record high on a recent dip in already-low mortgage interest rates, but earlier data were revised sharply downward, a separate report showed.

There was little market reaction to the economic data. The Dow Jones industrial average was down 53.12 points, or 0.51 per cent, at 10,450.48 in morning trading on the New York Stock Exchange. US Treasury debt prices were a touch higher on the durables report. The 10-year note was up in price 5/32 on the day, with its yield at 4.01 per cent -- close to the psychologically important 4.00 per cent level.

The Commerce Department said new single-family home sales rose unexpectedly to a seasonally adjusted annual rate of 1.316 million units, a new record, from a downwardly revised 1.313 million rate in March. Analysts were expecting a 1.350 million rate, down from the previously reported 1.431 million pace.

"Even though the Fed has raised short-term rates eight times over the last year it hasn't been enough to dampen the housing market yet," said Gary Thayer, chief economist for AG Edwards & Sons in St. Louis.

The Commerce Department said durable orders excluding transportation have declined in two of the last three months, and those orders were at their lowest dollar amount since December.

Revisions moved the previous month's readings up, however. Durable goods orders in March were revised to show a 1.6 per cent drop, up from a previously reported 2.3 per cent decline. Excluding transportation, orders were up 0.2 per cent in March from a prior reading of a 0.5 per cent fall.

Wall Street economists had expected durable goods orders to climb 1 per cent overall and 1 per cent excluding transportation.

Transportation equipment orders rose 8.2 per cent as orders for civilian aircraft and parts rose 28.2 per cent and military aircraft orders surged 26.3 per cent. Both reversed large drops in March.

Computer orders jumped 15.8 per cent after a 5.3 per cent slide in March.

Analysts saw evidence of an upturn in business spending plans as orders for non-defence capital goods excluding aircraft rose 1.6 per cent, reversing a 1.6 per cent drop the preceding month.

"Considering everything, I think the picture is a little bit brighter for the second quarter and some of our fears on the economy in context of this soft patch scare are at least slightly alleviated," said Ken Mayland, president of Clearview Economics LLC in Pepper Pike, Ohio.

A separate report showed low rates fuelling home buying and mortgage refinancing. Applications for US home mortgages increased last week amid a rise in purchasing and refinancing activity, the Mortgage Bankers Association said.

The MBA's seasonally adjusted index of mortgage application activity increased 4.3 per cent to 729.6, partially offsetting the 10.5 per cent decline during the previous week.

- REUTERS