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Rising Orders Ease Recession Gloom

From Wire Reports

A strong report on factory orders and a disappointing trade deficit helped focus economic attention last week away from the possibility of recession.

The Commerce Department announced Friday that U.S. factory orders for big-ticket goods posted a larger-than-expected increase in May, the first gain in four months.

Orders for goods ranging from blast furnaces to blenders and air conditioners rose 2.5 percent last month - the largest advance since last November’s 3.4 percent advance.

“Durable goods orders have been exhibiting a strong upward trend since the end of the last recession,” said Richard Yamarone, an economist at Commonwealth Bank of Australia in New York. Yamarone and other economists said the slump earlier this year was simply a short-term correction.

Earlier in the week, The Commerce Department reported that the U.S. trade deficit in goods and services hit an all-time high in April, up 16.2 percent from a March deficit of $9.79 billion. The deterioration reflected a $738 million rise in imports, which set a record, and an $882 million drop in exports.

The report raised tensions in advance of a Wednesday deadline for the United States to impose tariffs on Japanese luxury cars.

Other economic reports last week:

The nation’s economy is still robust, but showing some signs of weakness, the Federal Reserve said in its quarterly Beige Book report on regional economic conditions.

The strongest economic growth is in the middle of the country, while there are “generally less favorable conditions on the East and West Coasts,” the report said.

Declining mortgage rates were no help to the U.S. housing sector in May, with starts falling 1.3 percent to an annual rate of 1.239 million units, weaker than predicted by economists.

However, starts rose 4.8 percent in the West during May.

American workers’ inflationadjusted compensation fell 2.7 percent in the year ended in March, the largest drop since the government began tracking wages and benefits in 1987, the Labor Department said Thursday.

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