May 27 (Bloomberg) -- Orders for durable goods unexpectedly climbed for a third month in April, a sign U.S. factories will help the world’s biggest economy strengthen.
Bookings for goods meant to last at least three years rose 0.8 percent after a 3.6 percent gain in the prior month that was stronger than previously reported, Commerce Department figures showed today in Washington. The median forecast of 68 economists surveyed by Bloomberg called for a 0.7 percent drop. Orders for military hardware surged by the most since December 2012.
A pickup in growth is propelling orders for electrical equipment, appliances and computers, benefiting companies such as Cisco Systems Inc. and Whirlpool Corp. Demand for cars and homes, together with the need to replace aging machinery, will underpin investment at the same time the global economy starts to improve.
“We’re looking at a nice upward trend for orders,” said Robert Brusca, president of Fact & Opinion Economics in New York, who projected a 1 percent gain in durables orders. “The signals for manufacturing are pretty good. It’s going to be an important contributor to growth.”
Other reports today showed that home prices in 20 U.S. cities rose at a slower pace in the year ended in March and a gauge of consumer confidence climbed in May to the second highest level since 2008.
The S&P/Case-Shiller index of property values increased 12.4 percent in March from a year earlier, the smallest 12-month gain since July, after rising 12.9 percent in the period ended in February, a report from the group showed today in New York.
The Conference Board’s confidence index climbed to 83 in May from 81.7 a month earlier that was weaker than initially estimated, the New York-based private research group said today. The reading matched the median forecast in a Bloomberg survey of 62 economists.
Stocks rose after the figures, with the Standard & Poor’s 500 Index advancing 0.6 percent to 1,911.27 at 10:36 a.m. in New York.
Estimates for durable-goods orders in the Bloomberg survey ranged from decline of 4.3 percent to a gain of 2 percent after previously reported 2.5 percent increase in March.
Excluding transportation equipment demand, which is often volatile, orders increased 0.1 percent after a 2.9 percent gain that was stronger than previously estimated. They were projected to be unchanged, according to the Bloomberg survey median.
The April figures reflected a 7 percent gain in demand for computers and a 3.4 percent increase in orders for fabricated metals.
The figures also reflected a 4.1 percent drop in bookings for commercial aircraft, according to the Commerce Department’s report. Boeing Co., the Chicago-based aerospace company, said it received 70 orders for planes last month, down from 163 in March.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines and communications gear, decreased 1.2 percent after a 4.7 percent surge the previous month that was the strongest since November.
Shipments of those goods, used in calculating gross domestic product, fell 0.4 percent after rising 2.1 percent, also more than previously estimated.
The value of capital goods shipments excluding military hardware and commercial aircraft was $68.1 billion in April, up from a $67.3 billion average from January-March, indicating business investment will contribute to second-quarter growth.
San Jose, California-based Cisco reported third-quarter sales and profit that topped analysts’ estimates as rising data traffic from smartphones and tablets fueled demand for networking equipment while the company cut costs.
Economic growth is projected to accelerate to a 3.5 percent annualized rate this quarter after stagnating in the first three months of the year, according to the median estimate in a Bloomberg survey of economists. Business investment fell at a 2.8 percent rate last quarter, the weakest result since the fourth quarter of 2009, reflecting a 5.5 percent plunge in equipment spending.
The housing industry may also be a source of strength for manufacturing. Sales of new and previously owned homes climbed in April, reports showed last week. Home appliance maker Whirlpool, based in Benton Harbor, Michigan, is among businesses that are upbeat.
“We are, I would say, still in the early stages of a rebound in the housing market,” Chief Financial Officer Larry Venturelli said at a May 14 homebuilding conference. Sales are getting a boost from purchases of appliances and demand for remodeling, he said.
Manufacturing expanded in April by the most this year with broad-based gains that signal factories will help propel the economy in the second quarter. The Institute for Supply Management’s index advanced to 54.9 from 53.7 a month earlier, the Tempe, Arizona-based group said on May 1.