Durable-goods orders, new-home sales see rebound in February

WASHINGTON -- Factories saw demand for big-ticket goods rebound in February, good news for the country's economic health and for manufacturers who have struggled to get their piece of the business recovery.

The Commerce Department reported Wednesday that orders for "durable" goods -- costly manufactured products that are expected to last at least three years -- rose by 2.5 percent last month. That was an improvement from the 2.7 percent drop registered in January and represented the largest increase since October.

February's performance was better than economists were expecting. They were calling for a 1.2 percent rise in durable-goods orders.

In other economic news, sales of new homes also bounced back in February, rising by a strong 5.8 percent, the department said in a second report. The increase -- the largest since June -- came after home sales declined by 1.1 percent in January as bad weather kept house hunters indoors.

Powered by low mortgage rates, home sales reached record highs in 2003 and are expected to be brisk this year as well.

Blow to MicrosoftBut on Wall Street, the Dow Jones industrials lost 15.41 points to close at 10,048.23. Terrorism fears and news that Microsoft Corp. received a record antitrust fine from the European Union weighed on investors.

The rebound in durable-goods orders in February was led by stronger demand for transportation equipment, including cars and airplanes. Orders for those goods jumped by 9.9 percent in February, compared with a 10.5 percent decline in January. Last month's rise was the largest since July 2002.

David Huether, chief economist at the National Association of Manufacturers, said the report shows that "the manufacturing sector is continuing to gain ground and emerge from its three-year-long slump."

Orders for computers, communications equipment, machinery and primary metals, which includes steel, all posted gains in February. But orders for fabricated metals and electrical equipment and appliances declined.

Still, Huether said he was especially heartened that orders for nondefense capital goods, a good proxy for business investment, rose by 2.9 percent in February, compared with a 2.7 percent decline the month before.

Other recent economic reports indicate that manufacturing activity is picking up. But many plants continue to operate well below full throttle and employment is still weak. Manufacturers cut jobs in February for the 43rd month in a row.

Hardest hit by the 2001 recession, manufacturers over the past three years have had to cope with difficult economic times at home and abroad as well as compete against a flood of imports flowing in the United States.

Job losses, trade and overall economic conditions are hot-button issues in the presidential campaign.

President Bush, who says he understands Americans' concerns about the loss of U.S. jobs to other countries, had defended his free-trade policies against Democratic attacks and warned against economic isolationism. Bush says making his tax cuts permanent will strengthen the economy and spur job growth.

But presumptive Democratic presidential nominee John Kerry says swelling U.S. trade deficits and job losses are evidence that Bush's economic and trade policies aren't working.

In the housing report, the increase in February pushed new-home sales to a seasonally adjusted annual rate of 1.16 million, the highest level since August.

By region, new-home sales soared by 28.5 percent in the West to a rate of 365,000. In the Northeast, sales went up by 12 percent to a pace of 103,000. But in the Midwest, sales dropped by 10.6 percent to a rate of 185,000 and in the South they dipped by 1.2 percent to a pace of 510,000.

Meanwhile, the median nationwide sales price of a new home in February rose to $205,500 from $196,100 in January. The median price is where half sell for more and half sell for less.