Orders for Computers, Appliances Jump in April

Orders for a range of manufactured goods jumped unexpectedly in April, a possible sign that the economy will skirt a full-blown recession despite a year of turmoil in the housing and credit markets.

The Commerce Department reported today that overall orders for durable goods declined in April by 0.5 percent compared with the previous month, largely because of a steep drop in orders for airlines and a slowing U.S. automobile market.

But the result was better than analysts expected: Excluding autos and the often volatile airline market, orders for big-ticket items such as computers and appliances increased by 2.5 percent. In addition, investment by businesses in capital goods -- again excluding aircraft -- increased by more than 4 percent, a sign of possible optimism among business owners.

Orders for durable goods that last more than three years can be volatile from month to month, but recent declines have matched the generally gloomy mood cast by rising energy prices and a prolonged slump in housing.

Today's report suggested, however, that the economy might avoid slipping into recession. Economic growth slowed to an estimated 0.6 percent in the first three months of the year; that figure will be updated tomorrow, and analysts expect the new estimate will show that first-quarter growth was stronger, perhaps about 0.9 percent.

The new durable goods information "was not a weak report," and was a sign that U.S. export of capital goods was helping offset a slowdown in domestic demand, wrote Nigel Gault, chief U.S. economist for the Global Insight consulting firm.

U.S. markets were up slightly on the news, which followed an unexpected jump as well in April sales of new homes. The Commerce Department reported yesterday that April new home sales had increased for the first time in half a year.

Though a separate index showed home prices falling at the fastest rate in 20 years, the surprise jump in sales was a positive sign for a housing market that has been in steady decline.

The Commerce Department reported that sales of new homes rose 3.3 percent in April, to a seasonally adjusted annual rate of 526,000 units. But that increase was compared with March, for which the government revised its sales estimate down to the weakest pace since April 1991.

The Commerce report showed that the median price of new homes sold in April was $246,100, up 1.5 percent from April 2007.

The inventory of unsold new homes edged down, to 10.6 months' supply at the April sales pace, compared with 11.1 months in March. However, the April level was still about double the normal inventory levels during the five-year housing boom.

Economists said new-home sales will remain weak as the housing industry struggles with falling prices and rising mortgage foreclosures, which are dumping even more homes on an already glutted market.