Ray of economic light?

Ray of economic light?

WASHINGTON — New signals the recession could be nearing a bottom emerged Wednesday in figures showing that orders to U.S. factories surged last month for everything from computers to aircraft and that a gauge of business investment rose by the most in nearly five years.

Still, an unexpected drop in new-home sales in May made clear that any rebound in the housing market, and the broader economy, likely will be long and slow.

Economists said the two reports showed an economy no longer in free-fall but still unable to mount a sustained recovery from the longest recession since World War II.

The 1.8 percent increase in durable goods orders in May was far better than the 0.6 percent decline that economists expected. It matched the rise in April, with both months posting the best performance since December 2007, when the recession began.

Orders for nondefense capital goods, a proxy for business investment plans, jumped 4.8 percent, the biggest increase since September 2004. That could signal that businesses have stopped trimming their investment spending.

The back-to-back monthly gains in orders for durable goods — items expected to last at least three years — were further evidence that a dismal stretch for U.S. manufacturers may be nearing an end. But analysts say any sustained rebound is months away.

Rebecca Blank, undersecretary of commerce for economic affairs, cautioned against reading too much into the big jump in durable-goods orders because the data can be volatile. But she said the report appears to show that the recent plunge in activity has subsided.

"The $64,000 question is how long we will be in this flat period," Blank said in an interview. "You don't want to call it too much of a recovery yet."

Private economists also were cautious, in light of rising unemployment, record levels of home foreclosures and spreading global economic weakness that's depressing U.S. exports.

The other government report showed new home sales dropped 0.6 percent in May to a seasonally adjusted annual rate of 342,000, from a downwardly revised April rate of 344,000. Economists had expected a sales pace of 360,000 last month. Sales were down nearly 33 percent from a year ago.

The median sales price, $221,600, fell 3.4 percent from a year earlier but was up 4.2 percent from April.

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