Sales of existing and new homes, orders for factory goods and consumer spending in the United States probably climbed a month ago, indicating that the country’s recovery is strengthening before the debt crisis in Europe rattled global financial markets, according to economists.
Bookings for durable commodities rose 1.5 percent, based on a Bloomberg News survey ahead of a Commerce Department report. Other surveys showed that combined sales for existing and new homes in April probably increased 5.5 percent, while household purchases probably rose for seven straight months.
"We’re in the early stages of a lasting recovery," said Mr. David Resler, chief economist of Nomura Securities International. "We had been leaning toward raising our growth forecasts, but the financial turmoil has given us pause to delay any upgrade."
Housing, which has rebounded this quarter thanks to the government tax incentive and improving weather, may also cool down in H2 of 2010 as unemployment hovers around 10 percent.
Increasing exports, the need to replenish depleted inventories, as well as spending on new software and equipment are generating production gains. Factory production rose six percent in the full year to April, the biggest year-over-year increase since April of 2000.
Government stimulus funding for infrastructure projects and energy efficiency is also spurring orders. Several economists expect the Commerce Department to report on Friday that consumers increased spending by 0.3 percent in April. The department will likely also report the economy grew 3.4 percent during the first quarter, more than the 3.2-percent rate it estimated in April as consumer spending improved.