The U.S. economy grew at a 1.7% annualized rate in the second quarter after a 1.1% gain the prior three months, Commerce Department figures show. The economy has grown at an average 2.2% quarterly pace since the recession ended June 2009.
Growth is projected to pick up in the second half of the year, climbing 2.3% in the third quarter and 2.6% in the last three months of the year, according to the median in a Bloomberg survey of 59 economists from Aug. 2 to Aug. 6.
One of the bright spots in the report was a gain in demand for motor vehicles. Orders for automobiles and parts increased 0.5% after a 0.2% gain in June. Cars and light trucks sold at a 15.7 million annualized rate in July and 15.8 million the prior month, the strongest back-to-back readings since late 2007, according to figures from Ward’s Automotive Group.
In a sign production will be sustained, the backlog of orders to factories increased 0.4% in July after surging 2.1%. Unfilled orders for non-military capital goods excluding transportation equipment climbed 1.1% last month following a 1.8% advance.
Today’s report also showed total shipments of durable goods decreased 0.3% in July after falling 0.1%.
Even as the economy in Europe shows signs of stabilizing, it will take time for sales to pick up for American manufacturers such as Toro Co.
“While encouraged by the recent news of the euro zone economy’s return to growth after six straight quarters of contraction, we realize the expansion is not evenly spread across member nations, and consequently, we cannot depend on a significant lift for our international businesses from economic growth in the region,” Michael J. Hoffman, chairman and chief executive officer at Toro, said on an Aug. 22 conference call with analysts. The Bloomington, Minnesota-based company makes lawnmowers and golf- course maintenance equipment.
The company reported third-quarter sales that beat forecasts, helped in part by stronger demand in its international and residential businesses. Toro also raised its full-year earnings outlook as margins improved.
The housing recovery is boosting orders for goods such as furniture and appliances. Sales of previously owned homes climbed in July to the fastest pace since November 2009 as more buyers entered the market to beat further rate increases, the National Association of Realtors said last week.
At the same time, higher borrowing costs show signs of cooling the residential real estate market. Purchases of new U.S. homes plunged last month by the most since May 2010, Commerce Department data showed last week.
The interest rate on a 30-year fixed home loan climbed to 4.58% in the week ended Aug. 22, according to data compiled by Freddie Mac. The benchmark gauge for home financing rose from a record-low 3.31% in November and posted its biggest-ever quarterly gain of 25% from April to June.