New home sales, orders for durable goods, consumer confidence post gains

WASHINGTON -- Orders to U.S. factories for big-ticket manufactured goods and sales of new homes rose sharply in October while consumer confidence soared in November, all indications the economy is recovering from the blow delivered by the Gulf Coast hurricanes.

The Conference Board, a private research company, said that falling gasoline prices and an improved jobs outlook had lifted confidence in November to a reading of 98.9, up from 85.2 in October.

Meanwhile, the Commerce Department reported that sales of new single-family homes shot up by 13 percent last month, the biggest one-month gain in more than 12 years. The increase pushed sales to an all-time high 1.42 million units at a seasonally adjusted annual rate.

The increase in home sales confounded analysts who had been predicting that new home sales would decline by 1.8 percent, reflecting continued increases in mortgage rates. It was possible that the unexpected surge reflected a final rush by buyers to get into the market before mortgage rates climb higher.

In another report, the Commerce Department said that orders to U.S. factories for durable goods rose by 3.4 percent last month, erasing a 2 percent decline in September that was blamed on disruptions from hurricanes Katrina and Rita and a machinists strike at aircraft giant Boeing.

The increase was better than the 1.4 percent advance that economists had been expecting and provided further evidence that the economy is shaking off the adverse effects of the Gulf Coast hurricanes.

"Manufacturing activity has held up remarkably well in the face of skyrocketing energy prices and natural disaster and is actually accelerating in its pace of growth in the final months of 2005," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, an industry group.

For October, durable goods orders rose by $7.1 billion to a seasonally adjusted $214.4 billion. More than half of that increase reflected a $4.1 billion jump in orders for military aircraft and parts, which surged by 140.4 percent to $7 billion.

That was the biggest increase since June of 2000 and reflected the billions of dollars being spent by the federal government in a defense buildup to fight wars in Iraq and Afghanistan.

Orders for commercial aircraft also increased in October, advancing by 50.4 percent to $11 billion after having fallen by 2.7 percent the previous month. The September decline was blamed in part on a strike by machinists at Boeing which disrupted activities at the nation's largest airplane manufacturer.

Orders for all transportation items were up 11.4 percent, a gain that reflected strength in both commercial and military aircraft sales. Orders for motor vehicles actually fell by 2.2 percent in October, reflecting the trouble automakers had spurring sales following the impact of a sharp surge in gasoline prices in September.

Excluding transportation, durable goods orders would have been up a more modest 0.3 percent following a 0.2 percent decline in September. Total durable goods orders had fallen 2 percent in September.

Orders for non-defense capital goods, considered a good barometer of business plans for expansion and modernization, rose by 6.7 percent last month after having fallen by 8.6 percent in September.