By Shobhana Chandra Oct. 28 (Bloomberg) -- Orders for durable goods and sales of new houses probably rose in September, capping the strongest quarter of U.S. economic growth in two years, economists said before reports today. Bookings for goods meant to last several years gained 1 percent, the fourth increase in the past six months, according to the median estimate in a Bloomberg News survey. New-home purchases climbed last month to the highest level in more than a year, another report may show. Gains in manufacturing and housing explain why economists project a report tomorrow will show the world’s largest economy expanded from July through September. Caterpillar Inc. and Eaton Corp. are among companies saying sales will improve in coming months as more than $2 trillion in global government stimulus boosts demand from China to Europe. “Increasingly, it does look like the start of a true economic recovery,” said James O’Sullivan, chief economist at MF Global Inc. in New York. “Home sales were a trigger for the recovery and manufacturing is certainly adding to it. The hope is that a pickup in business spending will help jumpstart the labor market as well over the next couple of quarters.” The Commerce Department’s report on durable goods is due at 8:30 a.m. in Washington. Projections in the Bloomberg survey of 76 economists ranged from a drop of 1 percent to a gain of 4.8 percent. More Sales At 10 a.m., the department may report new-home sales rose 2.6 percent to a 440,000 annual pace from a 429,000 rate in August, the survey median shows. An $8,000 tax credit for first-time buyers and Federal Reserve efforts to lower borrowing costs have helped revive demand, economists say. A report from the Commerce Department tomorrow may show the economy grew at a 3.2 percent annual pace last quarter, according to the median estimate of economists surveyed. It would be the first positive reading in more than a year and the strongest performance since the third quarter of 2007. The Standard & Poor’s 500 Index has rallied 57 percent from a 12-year low on March 9 on mounting expectations that a U.S. economic recovery will boost company profits. Today’s report on durable goods may show that orders for transportation equipment, which are often volatile, were little changed last month as a decrease in demand at Boeing Co. was partly offset by surging auto bookings as dealers restocked inventories depleted by the administration’s “cash-for- clunkers” plan. Aircraft Demand Chicago-based Boeing, the world’s second-largest maker of commercial jets, got 20 plane orders in September, down from 32 the prior month, according to company data. Its deliveries last month jumped to 52 from 28. Excluding transportation gear, durables orders rose 0.7 percent, according to the Bloomberg survey median. Companies seeing a turnaround include Caterpillar, the world’s largest maker of bulldozers and excavators, which issued a full-year profit forecast exceeding the highest prediction from analysts. Peoria, Illinois-based Caterpillar is considered a bellwether for its ties to construction and mining and its overseas presence. “We are seeing encouraging signs that indicate a recovery may be under way,” Chief Executive Officer Jim Owens said in a statement on Oct. 20. “We’ve already started planning for an upturn.” Europe, Asia A day earlier, Eaton, which makes circuit breakers and fuel pumps, reported third-quarter profit that topped analysts’ estimates and said earnings this year will be higher than previously forecast. Electrical markets in Europe and Asia are starting to recover, the Cleveland-based company said. “We believe we are seeing the European electric market start to stabilize,” Chief Executive Officer Sandy Cutler said on an Oct. 19 conference call. He still predicts the U.S. stimulus bill will add about $500 million in “incremental revenue” to Eaton in 2010. Housing is also on the mend. Existing home sales, which make up more than 90 percent of the market, jumped to a 5.57 million annual rate in September, the highest level in more than two years, the National Association of Realtors reported last week. The S&P/Case-Shiller home-price index covering 20 U.S. cities climbed 1 percent in August, the third consecutive gain, figures yesterday showed.

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