New home sales in the U.S. fell 2.5% to a seasonally adjusted, annualized pace of 512,000 in May, with sales in the Western U.S. plunging to a 26-year low, the U.S. Commerce Department announced Wednesday (pdf).

Economists surveyed by Bloomberg News had expected May new home sales to register a 515,000 annualized rate.

Sales are still down about 40% compared to a year ago. In 2007, 776,000 new homes were sold, compared to 1.05 million in 2006.

Meanwhile, inventories rose to a 10.9-month supply in May at the current sales pace, compared to a 10.6-month supply in April. A typical, healthy housing market has a three to four month supply of homes for sale.

Sales fell in three regions: 11.6% in the West, 7.9% in the Northeast, and 5.1% in the Midwest. Sales rose a scant 0.4% in the South. Further, the West's 114,000 annualized sales pace was that region's slowest sales pace in 26 years.

U.S. durable goods orders were flat in May, as demand for airplanes and defense goods offset weakness in machinery and metals, the U.S. Commerce Department announced Wednesday.

Economists surveyed by Bloomberg News had expected May durable goods orders to remain flat. Durable goods orders decreased a revised 1.0% in April.

Equally significant, excluding the often-volatile transportation component, durable goods orders fell 0.9% in May. Also, excluding defense orders, durable goods orders declined 0.6%.

In May, shipments fell 1.1%, unfilled orders increased 0.9%, inventories increased 0.4%.

By category, in May orders for civilian aircraft jumped 10.3%, transportation increased 2.6%, computers and electronics climbed 2%, motor vehicles and parts declined 3.3%, transportation goods dropped 3.7%, and machinery declined 5.3%.

Foreign demand continues

Economist David H. Wang told BloggingStocks Wednesday exports continue to offset sluggish domestic demand conditions. "Export demand continued in the May report. It's helping keep U.S. businesses and factories busy during this down period in domestic demand," Wang said.

U.S. housing starts decreased 3.3% in May, the U.S. Commerce Department announced Tuesday, as builders attempted to reduce supply amid the nation's worst housing slump in a generation.

Housing starts totaled a 969,000 annual rate in May, the Commerce Department said. It was the lowest housing start pace in 17 years.

Economists surveyed by Bloomberg News had expected housing starts to total a 985,000 annualized rate in May.

Further, housing starts are down 32.1% in the past year and single-family home starts are down 41.2%. Over the past four months, housing starts have averaged a 1.02 million annual pace.

Meanwhile, building permits, a measure of future construction, decreased 1.3% to a 969,000 annualized rate in May. Single-family permits decreased 4%. Building permits have declined 36.3% in the past year.

Economist Glen Langan told BloggingStocks Tuesday many potential homebuyers are remaining in wait-and-see mode, as the housing slump persists.

U.S. business sales increased 1.4% in April - - the fastest pace in five months - - outpacing inventory growth and leaving businesses with small inventory levels, the U.S. Commerce Department announced Thursday.

Sales have increased 6.8% since April 2007.

Meanwhile, inventories increased a modest 0.5% in April, above the 0.3% consensus estimate of economists surveyed by Bloomberg News. Inventories have increased 5.4% since April 2007.

Further, the April business inventory-to-sales ratio declined to 1.25, with the typical company now possessing about a 38-day supply of goods in storage/inventory rooms. A year ago, in April 2007 the inventory-to-sales ratio was 1.27.

The U.S. trade deficit rose to $60.9 billion in April, the U.S. Commerce Department announced Tuesday, as the rising cost of imported oil offset gains in goods exported.

Economists surveyed by Bloomberg News had expected the trade deficit to be $59.5 billion. Also, the March trade deficit was revised lower to $56.5 billion from the previously announced $58.2 billion.

In April, imports increased to 4.5% to $216.4 billion, with imported petroleum driving up the total. The United States paid a record $96.81 average price for a barrel of oil during the month. Exports increased 3.3% to $155.5 billion, boosted by sales of commercial aircraft, autos, machinery, and agricultural equipment.

Meanwhile, the nominal April trade deficit, which controls for inflation, fell to $46.9 billion - - its lowest level in about 5 years.

Bad news, Good news

Economist David H. Wang told BloggingStocks Tuesday he's emphasizing the good news in the report which he argues is the more substantive and telling dimension of the report.

"If you take away oil and control for inflation, we can see a continued downward track in the trade deficit, led by rising exports," Wang said. "As we saw in the February and March trade data, international demand for U.S. goods is a bright spot in our economy. Without it, would will be in a pronounced recession."

U.S. factory orders unexpectedly jumped 1.1% in April 2008, the U.S. Commerce Department announced Tuesday, primarily due to increased prices for gasoline and other petroleum products.

Economists surveyed by Bloomberg News had expected April 2008 factory orders to decline 0.1%. Factory orders increased 1.5% in March 2008.

Excluding a 7.9% decline in transportation goods, factory orders rose 2.6% April 2008.

In April 2008, durable goods orders fell 0.6%, orders and shipments for non-durable goods rose 2.8%, including a 6.3% increase in petroleum refinery orders. Excluding petroleum good orders, factory orders increased 0.4%.

Economists follow the factory orders statistic because it provides one of the most comprehensive surveys of advance orders for durable goods -- how busy factories are likely to be in the period ahead. Factory orders also are a major value-added component of the U.S. economy.

Economic Analysis: A pleasant surprise: a positive April 2008 factory orders report, although one must keep in mind the higher prices for gasoline and petroleum products, which skewed this month's statistic upward. Excluding petroleum goods, factory orders increased 0.4%, a more-modest increase. Still, it's better than a decline. Further, excluding the often-volatile transportation orders component, factory orders rose 2.6% -- again, not fantastic, but still a positive data point for the U.S. economy. The report also suggests that the manufacturing pullback during this economic slowdown will not be as large as previous slowdowns.

Just call it a status-quo month for U.S. purchasing power.

Personal income, consumer spending and consumer prices all rose 0.2% in April 2008, the U.S. Commerce Department announced Friday -- a report that suggests the economy slowed to a crawl as tax rebate checks started to arrive.

Economists surveyed by Bloomberg News had expected to 0.2% increases in both consumer spending and personal income in April 2008.

Further, it was the fifth straight month of sluggish consumer spending performance. Also, in real terms, employee compensation declined 0.1%, its first decline in 12 months. Real disposable incomes are up 1.2% in the last 12 months.

Economist Peter Dawson said the April 2008 consumer spending statistic was not a surprise. "Consumers are cutting back, given the large increases in their monthly expenses for food and gasoline, so a 0.2% spending rise is a bit of an achievement," Dawson said. "It could have been much lower, given the lack of improvement in purchasing power."

The U.S. economy grew at a modest pace in Q1 2008, the U.S. Commerce Department announced Thursday, weighed-down by the nation's worst housing slump in more than 15 years and slowing consumer spending.

U.S. Q1 2008 GDP increased 0.9%, slightly above the 0.6% preliminary Q1 2008 GDP estimate. The economy grew at a 0.6% rate in Q4 2007. It was the smallest two-consecutive-quarter GDP increase in five years. The U.S. economy has grown 2.5% in the past 12 months.

Economists surveyed by Bloomberg News had expected the economy to grow at a 1.0% rate in Q1 2008.

Also, the Q1 2008 core PCE price index -- a statistic the U.S. Federal Reserve monitors closely -- was revised lower to a 2.1% annualized rate, from the preliminary 2.2% rate. Equally significant, core prices have risen 2% in the past year, slightly above the Fed's so-called 'comfort zone' for core inflation.

Economists surveyed by Bloomberg News had expected the core PCE price index to increase 2.6% in Q1 2008. The overall consumer price index increased at a 3.5% annual rate in Q1.

The Q1 2008 GDP statistic was driven by an increase in exports and defense spending.

U.S. durable goods orders in April 2008 fell just 0.5% but the core rate rose as demand for electronics goods offset weakness in airplanes / autos, the U.S. Commerce Department announced Wednesday.

Economists surveyed by Bloomberg News had expected April 2008 durable goods orders to decline 1.1%. Durable goods orders decreased a revised 0.9% in March 2008.

Equally significant, excluding transportation, durable goods orders rose 2.5% in April 2008, the biggest increase in nine months, and the second straight increase. Durable goods orders excluding transportation rose 1.5% in March 2008.

In April 2008 electrical equipment / appliances / components orders rose 27.8%, non-defense capital goods increased 4.2%, shipments rose 0.5%, unfilled orders increased 1.0%, transportation fell 8%, airplane orders fell 24%, and automobiles declined 3.3%.

Economist David H. Wang told BloggingStocks exports are offsetting sluggish domestic demand conditions. "In the April report we can see demand from foreign purchasers picking up. If this trend continues in the months ahead it will help the U.S. pull out of its housing-induced economic contraction," Wang said. "China, broader Asia, and Latin America are helping to fill in the gaps created by low domestic demand."

Further, Wang said the significant export lift is yet another change created by globalization -- the development of national economies and the spread of capitalism to every region of the world. If that foreign demand remains strong, the export trend has the capacity to shorten the U.S. recession -- "make it more shallow" than previous U.S. economic downturns.

U.S. new home sales unexpectedly rose 3.2% (PDF) to a seasonally adjusted, annualized pace of 526,000 in April 2008 -- the first rise in new home sales in six months, the U.S. Commerce Department announced Tuesday.

Economists surveyed by Bloomberg News had expected April 2008 new home sales to register a 522,000 annualized rate.

Nevertheless, sales are still down about 42% in the last 12 months.

Meanwhile, inventories dipped to a 10.6-month supply in April 2008 at the current sales pace, compared to an 11-month supply in March 2008 and a 9.8-month supply in February 2008.

Also, the median sales price increased 9.1% in April 2008 to $246,100.

Sales rose in three regions: Northeast, up 42%; West, up 8.3%; and the Midwest, up 5.8%. Sales fell 2.4% in the South.

Economic Analysis: Sales did nudge-up slightly in April 2008, but the key stats remains the large, 10.6-month supply of unsold new homes and the 42% decline in new home sales compared to a year ago. A normal, healthy market has a 3-4 month supply of new homes for sale, and that fact, combined with the large decline in year-over-year sales, suggests a market with scant demand. Investors / traders should also ignore the one-month rise in the median sales price: a trend takes at least 3-4 months to form, and the higher one-month median price jump could simply reflect a large number of lower-priced homes taken off the market, or not sold.

U.S. housing starts increased 8.2% in April 2008 -- an upside surprise skewed by a 36% rise in multi-family unit construction. Housing starts totaled a 1.032 million annual rate in April 2008, the U.S. Commerce Department announced (pdf) Friday.

Economists surveyed by Bloomberg News had expected housing starts to total a 940,000 annualized rate in April 2008.

Still, housing starts are down 31% in the past year and single-family starts are down 42%, the largest decline for single-family starts since 1992.

Meanwhile, building permits, a measure of future construction, increased 4.9% to a 978,000 annualized rate in April 2008; single-family permits increased 4% and multi-family permits climbed 6.8% during the month.

U.S. business inventories rose a scant 0.1% in March 2008 (pdf), the U.S. Commerce Department announced Tuesday -- the smallest inventory rise in a year.

Economists surveyed by Bloomberg News had expected March 2008 inventories to rise 0.5%.

Also, the March 2008 inventory-to-sales ratio declined to 1.27. Meanwhile, the February 2008 business inventory statistic was revised higher to an increase of 0.2%.

Inventories: Two-sided stat

Economist David H. Wang told BloggingStocks Tuesday the March 2008 inventory data can be interpreted two ways, with positive and negative dimensions.

On the one hand, businesses are keeping inventories at a bare minimum -- a fact that typically is bearish, short-term, for the U.S. economy, Wang said. "It can reflect a lack of business confidence in the economy's ability to grow in the short run," he said.

On the other hand, those same lean inventories mean that any sustained increase in demand will require businesses to ramp-up production quickly -- a phenomenon that generally limits the length of a recession / economic downturn, Wang said.

Another positive dimension to lean inventories: companies will not have to trim as many employees if the U.S. economy slows further. "In all, this month's inventory report contained a lukewarm stat," Wang said. "The best aspect of it is, businesses are prepared for a further downturn in the economy, should it occur."

The U.S. trade deficit fell substantially in March 2008, to $58.2 billion, the U.S. Commerce Department announced Thursday, as the slowing U.S. economy reduced consumer demand for imported automobiles, furniture and consumer goods, among other categories.

The March 2008 trade statistic was the lowest trade gap since November 2003, the Commerce Department said.

Economists surveyed by Bloomberg News had expected the March 2008 trade deficit to be $60.8 billion.

The February 2008 trade deficit was revised lower to $61.7 billion from $62.3 billion. The trade deficit was $59.0 billion in January 2008.

In March 2008, nominal imports decreased 2.9% to $206.7 billion, while nominal exports fell 1.7% to $148.5 billion.

Slowing U.S. economy weighs

Economist David H. Wang told BloggingStocks Friday the March 2008 trade report clearly displays the effects of a slowing U.S. economy.

"We see a clear pullback in domestic demand in March [2008], and the core import number was down 3%, so that's indicative of fewer consumers making purchases, which is consistent with belt-tightening and U.S. payroll reductions," Wang said. "It's clear now our nation is demanding less from international suppliers, which will have a negative effect on their economies, as well."

U.S. factory orders increased a surprising 1.4% in March 2008, the U.S. Commerce Department announced Friday, on rising international demand for U.S. goods. It was the fastest growth for factory orders since December 2007.

Economists surveyed by Bloomberg News had expected March 2008 factory orders to increase by 0.3%. Factory orders fell a revised 0.9% in February 2008, slightly better than the previously announced decline of 1.3%.

Also factory orders, excluding the volatile transportation equipment component, increased 2.2% in March 2008.

Economists follow the factory orders statistic because it provides one of the most comprehensive surveys of advance orders for durable goods -- how busy factories are likely to be in the period ahead. Factory orders also are a major value-added component of the U.S. economy.

Orders for durable goods increased 0.1% in March 2008, revised up from the 0.3% decline estimated a week ago. Orders for nondurable goods rose 2.6%, unfilled orders increased 1.1%, shipments climbed 1.1%, and inventories for manufactured goods rose 1.1%.

U.S. economy's saving grace: exports

Economist Peter Dawson told BloggingStocks Friday the economy "is making a concerted effort to complicate economists lives" by recording stronger-than-expected economic data, of late.

Consumer spending increased 0.4%, but rose just a scant 0.1% after adjusting for inflation, in March 2008, the U.S. Commerce Department announced Thursday, as higher prices eroded income gains for Americans.

Further, it was the fourth straight month of sub-par real consumer demand.

Economists surveyed by Bloomberg News had expected March 2008 consumer spending to increase 0.3%.

Meanwhile, inflation accelerated in March 2008, with consumer prices increasing 0.3%. Core prices, which exclude food and energy, also increased just 0.2%. For the past 12 months, consumer prices have increased 3.2%, while the core rate has increased 2.1%, or just above the U.S. Federal Reserve's inflation ceiling, commonly referred to as the Fed's 'comfort zone.'