Orders for durable goods in the U.S. increased less than forecast in July and sales of new homes unexpectedly dropped, increasing the risk of a renewed recession in the world’s largest economy.
Bookings for goods made to last at least three years rose 0.3 percent, figures from the Commerce Department showed Wednesday in Washington. Excluding transportation equipment, demand fell by the most in more than a year.
Purchases of new dwellings fell 12 percent to an annual pace of 276,000, the weakest since data began in 1963, figures from the same agency showed.
The reports indicate that capital spending, one of the few bright spots in a weakening economic recovery, is slowing as the second half begins, while a lack of jobs is crippling housing. Mounting signs of a slowdown are increasing pressure on the Federal Reserve to find more ways to spur growth after saying this month it would prevent its securities holdings from shrinking.
“The risks of a double-dip recession are steep enough to provide cause for worry,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York, who said the odds of another economic slump are about one in three, twice as high as earlier this year.
Homebuilder shares gained on speculation that the worst of the decline is over, said Jack Micenko, an analyst at Susquehanna International Group LLP. The S&P Supercomposite Homebuilding Index rose 3.7 percent. Luxury-home builder Toll Brothers Inc. reported Wednesday its first quarterly profit since 2007 after a tax benefit and a drop in write-downs.
