Factory orders and new-home sales rise

WASHINGTON - The economic recovery got a lift in April as orders for large manufactured goods surged while sales of new homes benefited from homebuyer tax credits.

Manufacturing is helping drive the rebound. But some economists worry about the threat posed to U.S. exports from the widening debt crisis in Europe. And some fear that home sales will falter in coming months because the tax breaks for buyers have expired.

Still, economists found the two Commerce Department reports released Wednesday generally encouraging.

"These are very strong numbers which suggests that the second quarter started off on a very solid note," said Mark Zandi, chief economist at Moody's Analytics.

Demand for commercial aircraft lifted orders for durable goods 2.9 percent last month. That was the best showing in three months. Excluding transportation, orders fell 1 percent in April. But that came after the March figures were revised to show a 4.8 percent jump.

A separate report showed sales of new single-family homes jumped 14.8 percent in April. That gain followed a 29.8 percent surge in March, the biggest monthly increase in 47 years.

Home sales have surged this spring as buyers rushed to sign sales contracts before tax credits expired on April 30. Historically low mortgage rates also helped fuel purchases.

But sales are expected to slump in the coming months as households deal with slow job growth and tight credit. Even with sales rising, the median price of a new home tumbled last month: It dropped 9.6 percent to $198,400. That indicates continued stress in the housing market.

Manufacturing has held steady during the recovery. U.S. companies are benefiting from rising demand at home and in major export markets. But some fear the debt crisis in Europe could derail the global recovery and depress U.S. exports.

The overall economy, as measured by the gross domestic product, grew at an annual rate of 3.2 percent in the January-March quarter. Economists thinks that figure will be revised slightly higher to 3.4 percent on Thursday.

Zandi said he expected GDP growth to dip slightly to just below 3 percent in the second quarter, partly because he thinks Europe's debt problems will weigh on U.S. exports. Growth may slow further in the second half of the year to around 2.5 percent, he said.

The rise in April orders was led by a 228 percent surge in demand for commercial aircraft, a volatile category. Boeing Co. booked orders for 34 new 777 planes, minus four cancellations.