WASHINGTON, 28 July 2005 — The US economy is enjoying a sizzling summer, new data showed yesterday with both manufacturing and housing posting red-hot performances that economists said could boost growth overall. Gross domestic product (GDP) data for the second quarter due out at the end of the week could now well be a positive surprise, pundits said.

“Although we still look for 3.5 percent for the second-quarter GDP number that will be released tomorrow, the risks to the figure are likely on the upside,” said Lehman Brothers economist John Shin. Led by robust demand for computers and machinery, orders for new US-made durable goods increased 1.4 percent in June, the Commerce Department said.

It was the third straight strong monthly increase and confounded analysts’ expectations of a fall of 1.0 percent. “It looks as if the manufacturing sector is off and running again. Durable orders jumped in June and it had nothing to do with airplane orders,” Joel Naroff of Naroff Economic Advisers said. “With orders soaring and backlogs buildings, whatever slowdown we may have seen in the manufacturing sector looks to be a thing of the past,” he said.

Daniel Meckstroth, chief economist for the Manufacturers Alliance, said the durable goods report “is a very positive sign that the manufacturing expansion is on solid footing”. “The conditions remain positive for equipment and machinery investment - interest rates are low, factories and other business are seeing increased usage rates, and corporate profits are strong,” he said.

The Federal Reserve, meanwhile, yesterday, in its monthly “Beige Book” survey, said the US economy expanded nationwide in June and inflation was moderate despite record-high oil prices. “Overall price pressures either eased slightly or remained unchanged in most districts, despite substantial increases in the costs of energy and some building materials,” the July Beige Book said.

The report will feed into the next meeting of the US central bank’s monetary policy committee on Aug. 9, which is widely expected to hike interest rates for the 10th time running to quell any oil-linked inflation. In contrast to stagnant growth in Europe and Japan, the US economy has been powering ahead with growth rates of 3.8 percent for two successive quarters up to March.

Economists expect tomorrow’s first estimate of GDP growth in the quarter to June will stand at 3.5 percent, down a touch because of the high oil prices but still a solid performance. Consumer spending has done much to account for that growth. A Conference Board survey out Tuesday showed a surprise fall in consumer confidence in July, but only after the June figure was revised up to a three-year high.

The spirits of US consumers rely to a great extent on the fortunes of the housing market, and other data out Wednesday showed that sector is doing as well as ever. Sales of new homes in the United States surged 4.0 percent in June to a new annualized high of 1.37 million, the Commerce Department said.

The new report came after the National Association of Realtors reported Monday that sales of existing homes rose 2.7 percent to a record annual rate of 7.33 million. “A larger-than-usual portion of those (new home) sales were of homes whose construction has not yet begun,” Nomura economists said in a research note.

Meanwhile, President George W. Bush urged Republican hold-outs to back a controversial free trade agreement with Central America, and party leaders predicted he would win but only after a tough fight for votes. “The president reminded us that we come here not only to represent our district but to represent the nation,” House of Representatives Majority Leader Tom DeLay told reporters after a Capitol Hill meeting between Bush and House Republicans, many of whom have opposed it on the grounds that it will hurt industries in their regions.

“It will be a tough vote but we’ll pass CAFTA tonight,” the Texas Republican said. The long-awaited vote would end months of uncertainty about the fate of the US-Central American Free Trade Agreement, or CAFTA, which lowers trade barriers between the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.