Three new pieces of U.S. economic data – durable goods orders, consumer confidence and home sales – all came in on the strong side today.

U.S. new orders for durable goods rose 1.0% in July, which was more or less in line with expectations. BMO Nesbitt Burns Inc. calls it “yet another sign that the U.S. manufacturing sector is turning the corner”. BMO says in a report that the rise comes on the heels of an upwardly revised solid advance of 2.6% in June, “representing the first back-to-back gains in new orders since February and March of 2001.”

RBC Financial Group says that the increase in orders was very broad based, with computers and electronic equipment posting the largest increase. Excluding transportation, new orders rose by 1.7%, over three times the expected 0.5% gain. Shipments of durable goods also increased for the third straight month, up 2.6%, and following a strong increase of 1.7% in June.

“With both new orders and shipments coming in so strongly, inventories will need to be replenished to keep up with demand, suggesting increased manufacturing activity in the months ahead,” says RBC. “This places additional importance on upcoming employment numbers, including Thursday’s initial claims, and next week’s employment numbers.”

“As firms buy into the recovery story, we could see a big pop in industrial production in the months ahead as companies replenish their shelves,” Nesbitt predicts. “There were no big surprises in the U.S. durable goods report, just further evidence that the recovery in the factory sector continues to gradually gather momentum.”

Also, the Conference Board’s index of consumer confidence rose to 81.3 in August from 77.0 in July, slightly higher than expectations. RBC says that the increase was solely a result of an improvement in expectations. The present conditions index fell to 61.6 from 63.0, just shy of March’s cyclical low.

“On balance, the improvement in confidence is a positive sign, particularly considering its impact on consumer spending, but finding a way to maintain this confidence is the more important task. Here is where we need the labour market to step in,” RBC says.

And, new home sales came in at 1,165,000 units, which RBC says is well above the 1,150,000 units expected. “Today’s numbers also come despite some increases in mortgage rates seen in July; it’s likely the back up in rates forced many prospective buyers off the fence and into the market,” Nesbitt says. “Increasing mortgage rates will eventually put a dent in housing demand, though little evidence of this has yet to be seen.”