Factory orders, home sales rise

May 27, 2010 at 12:00a.m.

Associated Press

WASHINGTON

The economic recovery got a lift in April as orders for large manufactured goods surged while sales of new homes benefited from homebuyer tax credits.

Manufacturing is helping drive the rebound. But some economists worry about the threat posed to U.S. exports from the widening debt crisis in Europe. And some fear that home sales will falter in coming months because the tax breaks for buyers have expired.

Still, economists found the two Commerce Department reports released Wednesday generally encouraging.

“These are very strong numbers, which suggests that the second quarter started off on a very solid note,” said Mark Zandi, chief economist at Moody’s Analytics.

Demand for commercial aircraft lifted orders for durable goods 2.9 percent last month. That was the best showing in three months. Excluding transportation, orders fell 1 percent in April. But that came after the March figures were revised to show a 4.8 percent jump.

A separate report showed sales of new single-family homes jumped 14.8 percent in April. That gain followed a 29.8 percent surge in March, the biggest monthly increase in 47 years.

Home sales have surged this spring as buyers rushed to sign sales contracts before tax credits expired April 30. Historically low mortgage rates also helped fuel purchases.

But sales are expected to slump in the coming months as households deal with slow job growth and tight credit. Even with sales rising, the median price of a new home tumbled last month: It dropped 9.6 percent to $198,400. That indicates continued stress in the housing market.

Manufacturing has held steady during the recovery. U.S. companies are benefiting from rising demand at home and in major export markets. But some fear the debt crisis in Europe could derail the global recovery and depress U.S. exports.