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By Lucia Mutikani
September 24, 2010 9:48 PM EDT
New orders for a wide range of long-lasting U.S. manufactured goods rose in August and business spending plans rebounded strongly, the latest sign a sharp summer slowdown in the economy was abating.
Other data on Friday showing new home sales were flat last month underscored the many obstacles to the recovery. Still, the durable goods report diminished concerns of a double-dip recession and implied a modest pick-up in output.
"For people looking for a double dip, the durable goods report told you the third quarter is going to look pretty good for capital spending. The markets reacted to that," said John Canally, an economist at LPL Financial in Boston.
On Wall Street, stocks snapped a three-day losing streak to end the session up 2 percent and rack up their fourth week of gains as investors welcomed the revival in business investment. The prices of safe-haven U.S. government debt fell, while the dollar dropped against a basket of currencies to its lowest level since February.
The U.S. Dollar Index <.DXY>, which measures the dollar's performance against a basket of currencies, registered its biggest weekly percentage drop since May.
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Durable goods orders excluding transportation rose 2.0 percent in August, the largest increase since March, after sliding 2.8 percent in July, the Commerce Department said. The increase exceeded market expectations for a 1.0 percent gain.
But a decline in aircraft and motor vehicle bookings depressed overall orders 1.3 percent, the largest drop in a year, after a 0.7 percent gain in July. A gauge of business spending plans rebounded 4.1 percent in August after July's 5.3 percent drop.
In another report, the department said new single family home sales were flat at an annual rate of 288,000 units in August, unchanged from July's rate and the second-lowest pace on record. However, the supply of houses on the market tumbled to the lowest in 42 years.
SIGNS OF STABILITY
The housing market is showing some signs of stability after a downward spiral following the end of a tax credit for home buyers in April. Data this week showed home building rose in August and sales of previously owned houses crawled off a 13-year low.
But a 9.6 percent unemployment rate and still tight access to credit are keeping potential home buyers on the sidelines.
"While the low level of mortgage rates would seem to be an enticement for sales, mortgage lending standards are only beginning to loosen," said Peter Muoio, a senior principal at Maximus Advisors in New York.
"We need to see stronger job growth and reduced uncertainty before households will be ready and willing to jump back into the housing market."
With housing still struggling for footing, builder KB Home
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