Economic signals start flashing green

WASHINGTON: Orders for US durable goods unexpectedly rose in February on a rebound in demand for machinery, computers and defense equipment.

The 3.4% increase, the biggest gain in more than a year and the first in seven months, followed a 7.3% decrease in January that was larger than previously estimated, the Commerce Department said in Washington. Excluding transportation equipment, orders gained 3.9%, the most since August 2005.

Combined with reports showing improvements in retail sales, residential construction and home resales, the figures indicate the economy is stabilizing after shrinking last quarter at the fastest pace in a quarter century. Stepped-up efforts by the Obama administration and Federal Reserve to ease the credit crunch may help revive growth later this year.

���It���s not going to be downhill forever,��� said Stephen Gallagher, chief US economist at Societe Generale in New York, who had forecast no change in durable goods orders. ���Once businesses achieve a reduction in their inventories they will pick up their new orders and production.���

Gallagher expects the economy to resume growth in the third quarter. ���I���m feeling better about that with this type of news. After some horrific data, we���re seeing some stability.���

Economists projected total durable goods orders would fall 2.5%, according to the median of 69 forecasts in a Bloomberg News survey. Estimates ranged from a drop of 4.1% to a 0.7% gain. Excluding transportation, orders were expected to decline 2%, according to the Bloomberg survey.

Demand for non-defense capital goods excluding aircraft, a proxy for future business investment, climbed 6.6% after falling 11.3% the prior month, a decline that was almost twice as large as previously estimated. Shipments of those items, used in calculating gross domestic product, increased 0.6% last month.

Business investment in new equipment fell last quarter at the fastest pace since 1958, according to figures from Commerce. The government will issue its advance estimate on first-quarter gross domestic product in April.