U.S. ECONOMY SHOWS PROMISING SIGNS OF GROWTH The U.S. economy is showing some promising signs of accelerated expansion despite the sluggishness of the fourth quarter last year, private economists say. Some of the slowness experienced in the October-December period had been expected to spill over into the first quarter this year, as the tax law changes that went into effect in January slowed business and consumer spending. But some of the latest economic data show signs of surprising strength in the U.S. economy, although some economists remain cautious about the outlook. The Commerce Department reported today that new orders for durable goods in February jumped by 5.7 billion dlrs, a six pct rise, to 101.2 billion dlrs. Even excluding volatile defense goods, durable goods orders rose a healthy 3.8 pct, the agency said. The February numbers surpassed the expectations of many financial analysts, whose predictions ranged from flat to increases of up to five pct. The January/February employment statistics suggest the Gross National Product will show a healthy rate of growth for the first three months of this year, said Lyle Gramley, an economist with the Mortgage Bankers Association. The U.S. jobless rate in February and January was 6.7 pct, the lowest rate since March 1980. The number of new non-farm jobs rose by 337,000 in February after a 319,000 gain in January and a 225,000 December increase, the government said. The employment data suggests a GNP annual growth rate of about three to 3.25 pct in the first quarter, said Gramley. Much of that will be attributed to businesses rebuilding their inventories and is not likely to be sustained in the second quarter, Gramley said. He expects a slowdown in the second quarter with smaller increases in personal consumption and government spending. He also sees residential construction declining mostly for multi-family housing units. Fidelity Bank senior economist Mickey Levy said some of the fourth quarter slowness will continue. Levy predicts GNP will grow at a scant 1.5 pct rate in the first quarter of 1987, accelerate during the second quarter and show a brisk 4.5 pct annual rate in the third quarter. The key to both forecasts is a marked improvement in the U.S. trade balance which is expected because of the decline in the dollar's value over the last year and half. "The improvement will be gradual and long lasting," Levy predicted. Most of it will be through import reduction, but at least one-third will be due to a rise in product exports as the prices of U.S. goods become more attractive overseas. The Reagan administration has predicted the trade deficit, which soared to record levels last year, will improve this year and the U.S. economy will grow by a respectable 3.2 pct for the year compared with a 2.5 pct rate last year. As part of the effort to reduce the trade deficit, the U.S. has been pressing West Germany and Japan to stimulate their domestic demand for goods from the U.S. and others. U.S. officials believe that would help take some of the pressure off the United States whose five years of economic growth has been the mainstay of developing countries. The U.S. economy provided them with a giant market for their goods giving them a way to earn income badly needed to service their foreign debt. The government last week said the U.S. economy grew at a modest 1.1 pct annual rate during the fourth quarter. There were indications of improvement in the huge imbalance between the volume of goods imported to the United States and those shipped abroad. The report showed a rising volume of exports corresponding to a decline in imports despite the fact that in current dollar terms, the U.S. trade deficit worsened during the closing three months of 1986. While fourth quarter economic growth was weak, corporate profits jumped a healthy 6.1 pct during the period, the government said. It also reported that inflation, as measured by the GNP price deflator, remained in check, growing a moderate 0.7 pct in the period, the lowest rise in 19 years. The government also reported that consumer spending, a key element of the five year economic recovery, jumped 1.7 pct in February, after falling two pct in January. The Federal Reserve Board also reported that the manufacturing sector, which had been one of the weaker elements of the U.S. economy, was showing signs of recovery. In its latest report on current economic conditions, the Fed said that economic activity in the various regions of the country ranged from uneven or steady to improving. Manufacturing activity showed signs of improvement in most regions except Dallas where orders remained sluggish. Chase Econometrics Chairman Lawrence Chimerine said the pick up in the U.S. manufacturing sector is largely due to the drop in the dollar's value. He said he does not foresee a major pick up in economic activity, but does not believe the economy will slip into recession either. He said higher prices on imported products and wage cuts that have helped the manufacturing sector will squeeze consumers purchasing power. "That pattern is starting and will continue for a number of years," Chimerine said. He sees economic growth hovering around a modest two pct level for the next few years.