July 20 (Bloomberg) -- Orders for long-lasting goods such as industrial machinery and computers rebounded in June and homes sold at a near-record pace, economists said they expect reports this week to show, adding to evidence of gathering economic momentum heading into the second half of the year. Bookings for durable goods, those made to last at least three years, may have risen 1.2 percent last month following declines in April and May, according to the median of 45 estimates in a Bloomberg News survey of economists. Sales of new and previously owned homes may have run at the second-highest rates ever, economists said. Retail sales rose more than expected last month and regional manufacturing surveys have shown factory orders in July continued to improve. With inventories low, rising demand is prompting increases in production that may lead to more corporate spending on new equipment, an element that has been missing during this recovery.
''We are already getting some orders through the September quarter, which is unheard-of through the last two years,'' said Thurman Rodgers, chief executive of Cypress Semiconductor Inc., in an interview Thursday with Bloomberg Television. The company, based in San Jose, California, makes chips that are used in Sony Corp.'s PlayStation 2 video-game machines and in wireless devices and computers. ``We are seeing customer inventories being very low.'' Excluding transportation equipment, the durable goods report due Friday from the Commerce Department may show a 0.9 percent increase, three times the 0.3 percent gain in May, according to the median forecast.
`Traction' in Spending
``You are starting to get some traction in overall'' business spending, said Cary Leahey, a senior economist at Deutsche Bank Securities in New York. ``That and jobs are the only two missing linchpins for sustainability'' in economic growth, he said. A rise in business spending would help supplement consumer demand, which shows few signs of fading. Sales of existing homes rose to a 6 million annual pace last month from 5.92 million in May, the National Association of Realtors may report Friday, according to economists surveyed. That would be second only to the record 6.1 million clip in January. Sales of new homes, which the Commerce Department is to report the same day, may have eased to a 1.12 million annual rate, second to May's record 1.16 million, economists said.
Low Mortgage Rates
Housing is benefiting from low mortgage rates. The average rate on a 30-year fixed mortgage fell to 5.21 percent in June, the lowest since Freddie Mac, the No. 2 buyer of U.S. mortgages, started keeping records in 1971. The rate was 6.54 percent a year ago. Sales of houses are leading to related spending on such items as furniture and appliances, contributing to economic growth. Retail sales of building materials and garden equipment rose 2.6 percent last month, the biggest increase since March, a Commerce Department report showed last week. Sales were up 6.1 percent from June 2002, the biggest 12-month percentage increase of any of the 14 categories tracked by the government. The Conference Board, a New York-based research group, may report Monday that its gauge of how the economy is likely to perform in the next six months rose 0.1 percent in June, the third consecutive monthly increase for the leading indicators, according to economists surveyed.
Fed's Forecast
Federal Reserve Chairman Alan Greenspan said during testimony before Congress last week that the economy is poised to accelerate and central bankers will leave the benchmark interest rate low ``as long as needed'' to ensure that it does. The Fed forecast the economy will grow at a 2.5 percent to 2.75 percent inflation-adjusted rate this year followed by 3.75 percent to 4.75 percent in 2004. The one area yet to show signs of a rebound is employment, according to economists. On Thursday, the Labor Department may say initial claims for jobless benefits rose to 415,000 last week from 412,000, according to the median forecast. That would be the 23rd straight week for claims to exceed 400,000, a level economists say is consistent with a weak labor market. //www.bloomberg.com