Mar 27, 2002 By Jeannine Aversa Associated Press Writer 4 min read

WASHINGTON (AP) – Orders to U.S. factories for big-ticket goods rose for the third straight month and consumer confidence surged, more evidence that the country is bouncing back from recession. The Commerce Department reported Tuesday that orders for costly manufactured goods expected to last at least three years grew 1.5 percent in February, though a lot of the strength came from a big jump in orders for airplanes and aircraft parts.

Consumer confidence in March rose to its highest level in seven months, bolstered by growing optimism about the economy and the job market, the New York-based Conference Board said in a second report.

The group’s Consumer Confidence Index rose to 110.2 this month from a revised 95.0 in February. Analysts were expecting a reading of 98.

Investors liked the reports. The Dow Jones industrial average was up 130 points and the Nasdaq index had gained 23 points by midday.

Economists are hopeful that the economy, which fell into recession last March, will return to more healthy growth in the second half of this year.

The consumer confidence report suggests that consumers – whose spending accounts for two-thirds of all economic activity – will feel good enough about the economy’s prospects to keep on spending in the months ahead, thus helping along the recovery.

“With consumer confidence soaring, the consumer will lead us to the promised land,” said Joel Naroff of Naroff Economic Advisors.

The latest snapshot of manufacturing activity is consistent with other economic reports suggesting that the battered sector is on the road to recovery after suffering through a slump that began a year and a half ago.

But Tuesday’s durable-goods report indicates that manufacturers are still encountering some rough patches.

“Though the manufacturing recession is clearly over, the data do not suggest a broad-based foundation for a strong recovery,” said David Huether, chief economist for the National Association of Manufacturers. He predicted manufacturing growth in the 2 percent range for the first half of this year, with stronger growth possible later on.

To cope with the slump, factories throttled back production and slashed hundreds of thousands of workers.

But the Federal Reserve reported that industrial production posted solid gains in January and February, and the Institute for Supply Management said manufacturing activity flashed a growth signal in February.

In Tuesday’s report, orders for transportation equipment posted the biggest gain, rising 8.6 percent in February, after a 3.9 percent advance. But most of the strength came from a huge, 41 percent jump in orders for airplanes and aircraft parts.

Orders for new cars and trucks fell 5.9 percent, after a 5.3 percent increase in January.

Excluding transportation orders, which can bounce around a lot from month to month, durable-goods orders dipped 1.3 percent in February, suggesting that the manufacturing recovery is fragile. It marked the first such decrease in the last five months.

Orders for electrical equipment and household appliances grew 5.5 percent in February, after falling 6.1 percent the month before.

And, orders for communications equipment rose 0.9 percent, on top of a 7.3 percent gain. Orders for machinery were flat, after falling 1.4 percent.

There were weak spots in the report. Orders for computers and electronic products fell 2.4 percent in February, the first decline since September. Semiconductors saw orders drop by 8.9 percent, after soaring 21.3 percent in January. And, orders for computers dipped 3.1 percent, after a 4.5 percent rise.

Orders for primary metals, including steel, declined 3.1 percent, after increasing 2.3 percent.

Citing signs that the country is on the mend, the Federal Reserve, after cutting short-term interest rates 11 times last year, decided last week to hold rates steady, just as it did in January.

With short-term interest rates at some of their lowest levels in four decades, consumers and businesses will still find it attractive to borrow to finance big-ticket purchases.

In another report, more Americans were past due on their credit card bills in the fourth quarter. The seasonally adjusted percentage of credit card accounts 30 or more days past due rose to 3.88 percent, up from 3.77 percent in the third quarter, the American Bankers Association said.

But the delinquency rate on a composite of other types of consumer loans – including auto loans, personal loans and home equity loans – dipped to 2.34 percent from 2.40 percent.

“These ups and downs net out to a fairly stable quarter from a consumer debt perspective,” said ABA chief economist James Chessen.