US data mixed as Fed maintains monetary policy

The US economic data on Wednesday were mixed. Bloomberg reports that durable goods orders jumped in May.

Orders for U.S. durable goods unexpectedly jumped in May, a sign companies are gaining confidence the recession is easing.

The 1.8 percent rise in bookings for items meant to last several years matched the previous month’s increase, the Commerce Department said today in Washington...

Demand for non-defense capital goods excluding aircraft, a proxy for future business investment, jumped 4.8 percent, the most since September 2004. Shipments of those items, used in calculating gross domestic product, rose 0.3 percent after dropping 2.7 percent.

But new home sales remained weak.

... Another report showed sales of new houses unexpectedly dropped last month, indicating foreclosures made existing homes more attractive...

Sales of new houses decreased 0.6 percent to an annual pace of 342,000 after a revised 344,000 rate in April that was lower than previously estimated, the Commerce Department also reported today. The median sales price fell 3.4 percent from May 2008, compared with a 17 percent drop for existing homes reported yesterday by the National Association of Realtors.

No surprise then that the Fed decided to maintain its monetary policy.

“The pace of economic contraction is slowing,” the Fed said in a statement after its meeting. Officials said inflation will remain “subdued for some time,” and rates will stay at “exceptionally low levels” for an “extended period.” Policy makers kept the benchmark interest rate between zero and 0.25 percent.

And if doubts about the US economic recovery linger, the same can be said of Japan's. From Bloomberg:

Japan’s export slump deepened in May, casting doubt on the nation’s growth prospects as the economy struggles to emerge from its worst postwar recession.

Shipments abroad dropped 40.9 percent from a year earlier, more than April’s 39.1 percent decline, the Finance Ministry said today in Tokyo. The median estimate of economists surveyed was for a 39.3 percent decrease. From a month earlier, exports fell 0.3 percent, the first deterioration since February.

Still, the consensus is that the global recession is at least easing, and the OECD is no exception to that view. From Bloomberg:

The Organization for Economic Cooperation and Development raised its forecast for the economy of its 30 member nations for the first time in two years as the U.S. slump shows signs of easing.

The combined economy of the world’s most-industrialized countries will shrink 4.1 percent this year and grow 0.7 percent in 2010, the Paris-based group, which was founded in 1961 to coordinate international economic policies, said today. The new projections compare with March forecasts for contractions of 4.3 percent and 0.1 percent.