U.S. orders for durable goods probably rose for the first time in three months in June on demand for electronics, communications equipment and machinery, a survey of economists showed in advance of today's government report. Orders for items made to last at least three years probably increased 1.5 percent after falling 1.8 percent in May, according to the median estimate of 67 economists surveyed by Bloomberg News. Excluding transportation equipment, bookings are projected to rise 1.1 percent after a 1.4 percent decline. The Commerce Department issues the report at 8:30 a.m. in Washington. Companies such as Xerox Corp., the largest seller of copiers in the U.S., and Cummins Inc., a maker of diesel engines, are reporting increased demand as businesses replace aging equipment and replenish inventories. Business investment may help bolster the economy in the second half of the year, economists said.
``A rebound in durable goods orders would underscore the idea that whatever weakness we saw in June was temporary,'' said Stephen Stanley, chief economist at RBS Greenwich Capital Markets in Connecticut. ``We've already seen reports that point to renewed strength in July.'' The Federal Reserve today releases its regional economic survey -- the beige book -- based on anecdotal reports from the Fed's 12 district banks. The report, which is released eight times a year, will be issued at 2 p.m. in Washington. The Fed's policy-setting Open Market Committee next meets Aug. 10. The Fed's last regional survey, released June 16, said the economy expanded from early April through early June with ``broad- based'' manufacturing growth and ``modest increases'' in consumer prices. In testimony to Congress last week, Fed Chairman Alan Greenspan said the central bank will likely pursue a ``measured'' pace of interest-rate increases this year to stem inflation. American Manufacturing The Institute for Supply Management said this month that its factory index held close to a 20-year high in June. The group's new-orders index and gauge of order backlogs each showed expansion for a 14th straight month. Business spending on new equipment and software will probably grow at an average 16 percent annual pace in the second half of the year after expanding at an average 10 percent rate from January through June, according to a forecast by economists at Barclays Capital Inc. in New York. Tax cuts approved last year included a greater allowance for depreciating investments in equipment, giving companies incentive to accelerate spending this year. The provisions expire in 2005. ``It's a very positive atmosphere for investment right now with tax incentives and low interest rates, and companies capital stock has gotten run down,'' said RBS Greenwich's Stanley. ``Firms are quite lean.''
Machinery, Equipment
Cummins, the world's largest maker of high-powered diesel engines, said second-quarter sales rose 38 percent. The Columbus Indiana-based company's sales were boosted by a surge in demand for heavy-duty trucks, as U.S. companies spent more money on machinery such as mining equipment and trucks. ITT Industries Inc., the world's biggest maker of water pumps and night-vision goggles, last week said sales rose 15 percent in the second quarter compared to the same period last year. The White Plains, New York-based manufacturer forecasts an 18 percent increase in the next three months, led by defense products. ``We had a great quarter,'' said Steven Loranger, chief executive of ITT, in an interview Friday. ``It's from all of our businesses.'' The economy will probably expand 4.5 percent this year, the most since 1999, according to the median of 55 economists surveyed June 25 to July 6 by Bloomberg News. Xerox said second-quarter profit more than doubled on lower costs and higher sales of more-profitable products such as color copiers and printers. The Stamford, Connecticut-based company also raised its 2004 forecast.
`Solid Shape'
``The economy is in solid shape,'' said John Faraci, chief executive of lumber and paper producer International Paper Co., on a call with investors yesterday. ``We now have more than just a consumer-led economy. We have industrial improvement and job creation.'' International Paper is based in Stamford, Connecticut. Some economic reports showed growth slowed last month. June payrolls increased 112,000, or less than half the gain of the previous month. Other data showed retail and auto sales fell, and industrial production declined for the first time since March. Regional manufacturing reports this month suggest that growth has bounced back. Manufacturing in the Philadelphia region expanded at a faster pace than expected this month as more companies reported stronger orders, a July 15 Federal Reserve report showed. A separate Fed report showed that manufacturing in New York state expanded for the 15th straight month in July. ///www.bloomberg.com