Mixed economic news from US and Japan

There was mixed news on the US economy yesterday.

Durable goods orders for February were disappointing, edging up only 0.3 percent, according to a Commerce Department report yesterday. Strong aircraft orders helped keep the overall numbers positive. Excluding a 1.6 percent transportation orders gain, durable goods demand would have fallen 0.2 percent. Orders for non-defense capital goods excluding aircraft fell 2.1 percent, but the January advance was revised upwards to 4.4 percent.

However, the Commerce Department also reported yesterday that sales of new US homes soared 9.4 percent in February, the largest jump in more than four years.

Also, the Labor Department reported yesterday that the number of workers seeking first-time unemployment benefits climbed 3,000 in the week ended March 19 to 324,000. While the rise was unexpected, claims were still well below year-ago levels.

The news flow from Japan has been rather weak recently.

A joint survey by the Finance Ministry and the Cabinet Office found that business sentiment declined to 0.6 percentage points in January-March from 2.1 points in the three months to December. However, the business conditions index at large firms is expected to improve to 3.6 percentage points in the April-June period and to 9.8 percentage points in July-September quarter. The survey also found that firms were planning to cut their combined capital investment by 7.4 per cent in the year to March 2006.

On Wednesday, the Finance Ministry had reported that the trade surplus shrank 21.7 percent in February from a year earlier for the second straight month of decline. Exports rose 1.7 percent to 4.85 trillion yen, up for the 15th straight month, but in volume terms, exports were 4.2 percent down for the second straight monthly decrease. Imports increased 11.3 percent to 3.75 trillion yen, up for the 12th month. Higher oil prices helped inflate the value of imports.

Overall, a mixed bag of news that does not inspire confidence in the prospect for a re-acceleration of the world economy but does not quite point to an impending recession either.