Boost to US Durable Goods as Home Sales Slide

27 August 2004

The US Commerce Department reports mixed findings on the state of the US economy in July, with durable goods orders posting their largest gain in four months but new-home sales dropping by 6.4%.

Strong demand for items such as civilian aircraft, primary metals and machinery contributed to the rise in durable goods orders of 1.7%, well above the 1% increase predicted by economists.

Although some analysts are worried that much of the gain is attributable to the transportation sector of goods, security firm RBC Dain Rauscher's head of fixed income research Vincent Boberski is less concerned: "the report is consistent with an economy still expanding, but at a slower rate."

A second report from the Commerce Department shows that sales of new homes fell to a 1.134 million annual rate, their lowest level since December last year.

Analysts blamed high energy prices and the slow job climate for a cautious buyers' market. However, MG Financial's chief currency analyst Ashraf Laidi believes the news "is not alarming because it's still above one million units."

The steep decline in house sales was matched by a 6.3% fall last week in new applications for home loans, according to the Mortgage Bankers Association.

Data sourced from: New York Times; additional content by WARC staff