By Timothy R. Homan
Sept. 25 (Bloomberg) -- Orders for U.S. durable goods and sales of new houses probably dropped in August, signaling the credit crunch hurt the economy prior to the downfall of major Wall Street firms, economists said before reports today.
Bookings for goods meant to last several years fell 1.9 percent last month, the most since January, according to the median estimate in a Bloomberg News survey. Americans probably purchased 510,000 new homes at an annual pace, down 1 percent from July, the survey also showed.
The figures underscore Federal Reserve Chairman Ben S. Bernanke's warning that financial instability poses a ``grave threat'' to economic growth. The collapse in lending prevents companies from investing in new equipment and makes mortgages harder to obtain.
``Facing tighter credit conditions, slowing demand and squeezed profit margins, businesses have been trimming payrolls and inventories,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York. ``The current economic environment is not conducive to strong equipment investment.''
The Commerce Department is scheduled to release its durable-goods report at 8:30 a.m. in Washington. Projections in the Bloomberg survey of 74 economists ranged from a drop of 5.9 percent to a 0.3 percent gain.
Excluding transportation equipment, orders probably fell 0.5 percent, the first decline in three months, according to the survey median.
Commerce's new-home sales report is due at 10 a.m. Estimates ranged from 493,000 to 555,000, according to the survey.
Claims Elevated
A report from the Labor Department is forecast to show the number of Americans filing first-time claims for unemployment benefits fell 5,000 to 450,000 last week, according to the survey. The level still indicates weakness in the labor market.
``Economic activity appears to have decelerated broadly,'' Bernanke said yesterday in testimony before a congressional Joint Economic Committee hearing. The Fed chief reiterated his call for Congress to pass Treasury Secretary Henry Paulson's plan for a $700 billion rescue fund to remove devalued assets from the banking system.
Boeing Co., the world's second-largest commercial planemaker, may have to provide more financing for its customers and may see more cancellations because of the spreading financial turmoil, Chief Executive Officer Jim McNerney said yesterday.
Order Cancellations
Previous economic slumps saw 5 percent to 10 percent of Boeing's orders cancelled, McNerney told reporters after a speech in Boston. This time around, ``it could be a little worse, could be better than that. We'll have to monitor the situation,'' he said. The company has a record $275 billion in order backlogs for commercial planes.
Chicago-based Boeing received orders for 38 aircraft in August, down from 70 a month earlier. About 27,000 Boeing machinists went on strike on Sept. 6.
American manufacturers have offset weakening domestic demand in recent months by filling overseas orders, with support from a lower dollar that's made U.S. goods more competitive. Still, further export expansion is in question as economies overseas falter.
Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago. Japan's economy shrank in the same period as consumers spent less and exports fell, the Japanese government said last month.
A technology slump that started in the U.S. last quarter spread to Western Europe and some Asian countries, Dell Inc., the No. 2 personal-computer maker, said on Sept. 16, reiterating comments made last month.
``We saw a very weak August,'' Chief Financial Officer Brian Gladden said at a Bank of America investment conference in San Francisco. ``It is not coming back the way we thought it would.''
Bloomberg Survey
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Durables Durables Initial New Home
Orders Ex-Trans Claims Sales
MOM% MOM% ,000's ,000's
================================================================
Date of Release 09/25 09/25 09/25 09/25
Observation Period Aug. Aug.Sept. 20 Aug.
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Median -1.9% -0.5% 450 510
Average -1.9% -0.7% 452 510
High Forecast 0.3% 0.9% 505 555
Low Forecast -5.9% -2.5% 433 493
Number of Participants 74 42 39 75
Previous 1.3% 0.7% 455 515
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4CAST Ltd. -5.0% -2.5% 460 505
Action Economics -2.5% 0.1% 455 510
AIG Investments -0.7% 0.9% --- 521
Aletti Gestielle SGR -2.0% --- 440 513
Analytical Synthesis --- --- --- 495
Argus Research Corp. 0.3% --- --- 520
Banc of America Securitie -2.0% --- --- 508
Bank of Tokyo- Mitsubishi -2.7% --- --- 498
Bantleon Bank AG -1.0% -1.5% --- 500
Barclays Capital -3.0% --- 445 500
BBVA -1.2% -0.6% 465 522
BMO Capital Markets -2.0% -0.6% 460 515
BNP Paribas -1.5% --- 460 510
Briefing.com -1.5% --- 445 515
Calyon -3.0% -1.0% --- 505
CFC Group -1.3% -0.4% 450 514
CIBC World Markets -2.0% -0.5% --- 520
Citi -1.4% -0.3% 445 515
ClearView Economics -2.0% --- --- 500
Credit Suisse -3.0% -1.0% 465 495
Daiwa Securities America -1.5% --- --- 500
Danske Bank --- --- --- 510
DekaBank -2.0% --- --- 510
Desjardins Group -2.2% --- 442 510
Deutsche Bank Securities -1.0% 0.0% 445 510
Deutsche Postbank AG -1.0% -0.3% --- ---
Dresdner Kleinwort -1.5% -0.5% --- 510
DZ Bank -1.5% -0.5% --- 510
First Trust Advisors -5.1% -1.5% 451 499
Fortis -1.0% -0.7% --- 515
FTN Financial -1.0% -0.3% --- 510
Global Insight Inc. -2.7% --- --- 505
Goldman, Sachs & Co. -2.0% --- --- 505
H&R Block Financial Advis -1.5% -0.5% --- 515
Helaba -1.4% -0.4% --- 515
High Frequency Economics -2.0% -0.5% 475 525
HSBC Markets -2.0% -1.3% 440 530
IDEAglobal -0.8% -0.3% 445 510
Informa Global Markets -1.9% -0.5% 460 505
ING Financial Markets -2.0% --- 450 520
Insight Economics -1.0% --- 450 510
Intesa-SanPaulo -2.0% -1.0% --- 510
J.P. Morgan Chase -3.0% --- 500 505
Janney Montgomery Scott L -1.9% -1.0% --- 493
Landesbank Berlin -5.9% -1.5% 450 510
Landesbank BW -1.0% --- --- 510
Lehman Brothers -3.0% --- 450 555
Lloyds TSB -1.0% -0.4% 445 510
Maria Fiorini Ramirez Inc --- --- 445 530
Merk Investments -1.3% 0.0% --- 535
Merrill Lynch -1.5% -0.3% 505 510
MFC Global Investment Man -2.0% -1.0% 445 505
Moody's Economy.com -0.9% -0.5% 460 505
Morgan Keegan & Co. -0.7% --- --- 511
Morgan Stanley & Co. -2.0% --- --- 525
National Bank Financial -1.9% -0.7% --- 505
National City Corporation -2.0% --- --- 510
Natixis -1.7% -0.6% --- 505
Newedge -1.0% -0.6% --- ---
Nomura Securities Intl. -0.6% -0.4% --- 522
PNC Bank -1.0% --- --- 495
RBS Greenwich Capital -3.0% --- 460 500
Ried, Thunberg & Co. -2.0% --- 450 510
Schneider Trading Associa -2.2% -0.7% 433 501
Scotia Capital -1.6% -0.6% 450 505
Societe Generale -1.8% 0.0% 435 515
Standard Chartered -1.6% --- --- 500
Stone & McCarthy Research -1.8% --- 433 515
TD Securities -1.5% -0.5% 440 500
Thomson Financial/IFR -1.1% -0.9% 445 505
Unicredit MIB -2.0% --- 440 530
University of Maryland -0.5% --- --- 515
Wachovia Corp. -4.0% -2.3% --- 500
Wells Fargo & Co. -2.5% --- --- 510
WestLB AG -1.5% --- --- 518
Westpac Banking Co. -2.5% --- 450 497
Wrightson Associates -2.0% --- 450 510
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To contact the report on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
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