Commerce Department figures reveal, while the demand for transportation equipment remains volatile, demand for durable goods, such as, machinery, metals, computers and communications gear increased, rising much more than the 2% forecast in November. According to the Labour Department, applications for unemployment insurance fell to their lowest level in over a year, last week.

After the long recession hiatus, business spending is now staging a comeback and last year’s large number of lay-offs will ensure a need to rehire in the coming year.

Signs of a recovery in global economy has seen stocks gain worldwide, while economists at Morgan Stanley in New York are raising their fourth-quarter economic growth forecast to 5.1% on the basis of the report on durable goods.

A fitful economic recovery draws strength from a stabilizing job market, signalling manufacturing will continue to contribute to the rebound.

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Meanwhile, the housing market showed further signs of strength in October, but nonresidential construction spending declined 1.5%.

The Institute for Supply Management said Tuesday that its index of manufacturing activity fell to 53.6 in November from 55.7 the prior month, although it remained above the key 50 level that indicates expansion. Although the employment and production components within the index slipped, new orders rebounded from an October decline and rose nearly two points to a level of 60.3.

“I didn’t expect new orders to jump up like that so it shows some strength there, which ultimately results in strength in other components,” said Norbert Ore, head of the survey committee.

But he cautioned that companies indicated some hesitance about hiring, and said only 12 of 18 industries surveyed reported overall growth.

Separately Tuesday, the National Association of Realtors said its index of pending home sales, a leading indicator of actual sales, rose for the ninth consecutive month in October to a level of 114.1, its highest since March 2006. The group’s chief economist, Lawrence Yun, credited the government’s tax credit for first-time home buyers with “helping unleash a pent-up demand” for housing.

Both housing and manufacturing activity are important barometers of the U.S. economy’s health, and economists are trying to gauge whether the rebound seen in both areas this year can be sustained without the boost from government stimulus programs.

In October, for example, the ISM manufacturing index rose to 55.7, but new orders of big-ticket durable goods actually slipped during the month, according to Commerce Department data released last week. A key gauge of business spending, nondefense orders for capital goods excluding aircraft, sank 2.9%.

One bright spot: Inventories are shrinking, paving the way for an increase in future orders and production. A third of manufacturing respondents told ISM their customers’ inventory levels were “too low” in November, while only 7% said they were “too high.”

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The plans come as Vice President Joe Biden hosts business leaders this afternoon to talk over ways to boost jobs in a sector that employs fewer Americans now than it did in World War II.

The administration’s plans tout U.S. manufacturing as a source of strength for the economy in areas such as fuel-efficient vehicles and biotechnology. But the plan faces several tough hurdles to taking effect, including international trade, government spending and relations with China.

“With the right policies, America can build competitive, domestic industries that once again support a vibrant middle class,” said Jared Bernstein, executive director of the administration’s middle-class task force.

The $5 billion would come in addition to $2.3 billion already set aside for the credit as part of the $787-billion stimulus plan. The credit for 30% of a project’s cost can be applied to technologies such as plug-in electric vehicles and batteries. The money isn’t automatic; federal officials choose which projects can get the credit based on several criteria, including how many jobs they create.

The administration’s plan suggests a variety of moves to boost manufacturing, from better training for factory workers to opening overseas markets and defending patents and copyrights. It also calls for government aid to areas where manufacturing has retreated, leaving no replacement for crippled local economies.

While job losses in manufacturing have slowed over the past few months, factories have steadily shed jobs in the past decade, thanks to a combination of off-shoring and rising productivity. Federal data show U.S. manufacturers employed 11.6 million people in November, well below the peak of 19.5 million in 1979, and the lowest level since the spring of 1941.

Manufacturers themselves have been divided in the past over ways the government could boost their output, with smaller firms calling for more aggressive action against China. By artificially holding down the value of its currency by up to 40%, China provides a subsidy to its exporters, one that’s increasingly under criticism from other nations.

While Obama pledged a tougher line with China during the election, and has slapped tariffs on Chinese tires, the administration has declined to declare China a currency manipulator, a move that would allow even tougher trade sanctions.

Biden is scheduled to meet this afternoon with 12 chief executives and three labor leaders to talk about the plan, including Dow Corning Chief Executive Stephanie Burns.

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It’s easy to shrug off the kooky world of apps. The bite-size software programs people load onto their mobile phones or tap into on the Web seem mostly to be silly games and pointless novelties. But look past the beer-drinking apps and flatulence programs and you’ll see something significant taking shape: a bustling app economy that’s creating new fortunes for entrepreneurs and changing the way business gets done.

It’s happening with dizzying speed. Just two years ago, almost none of this existed. Apple’s (AAPL) App Store, the most popular destination for mobile-phone programs, was launched last summer. Now there are more than a dozen rival stores, and at least 100,000 apps have been created. Some startups that staked their claim in the app economy have become large, lucrative businesses in just a few months. Two-year-old Zynga, which makes popular game apps, is already profitable, with more than $100 million in revenues. By comparison, Google (GOOG) didn’t start making money until its third year—and still had less revenue.

There are serious business tools among the thousands of new apps. Salesforce.com’s (CRM) programs let executives manage customer relationships from an iPhone or BlackBerry. Oracle (ORCL) apps let managers check inventory or get a snapshot of a business unit’s performance. The computing that people used to do at their desks increasingly can be done on devices they can carry anywhere.

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Although the article addresses a wonkish subject — how to measure the environmental impact of energy sources such as ethanol and wood chips, which absorb carbon as they grow but release it back into the atmosphere when they’re burned — it has broad implications. The method undercounts the global-warming contribution of some bioenergy crops, the team of 13 researchers wrote, because it doesn’t factor in what sort of land-use changes might occur to produce them.

“We made an honest mistake within the scientific framing of the debate, and we’ve got to correct it to make it right,” said Steven P. Hamburg, chief scientist at the Environmental Defense Fund and one of the paper’s authors.

When calculating the greenhouse-gas emissions limit, government officials in the United States, Europe and elsewhere do not count the carbon that biofuels release when they are burned. But carbon is released when a producer clears and burns trees, even to grow a crop destined for the biofuels market. Officials also established a legal system that limits emissions from energy use but not from land-use activities such as clearing forests.

In recent months, researchers have begun to worry that bioenergy crops could replace the world’s forests and savannahs on a huge scale unless climate policies start to take full account of how these crops’ production affects greenhouse-gas concentrations. None of the major climate regimes — including the Kyoto Protocol, the European Union’s carbon market and the House-passed climate bill — account for the carbon released by changing land use for biofuels.

“If you only count part of the carbon, you set up a set of incentives that are all wrong,” said Jae Edmonds, a chief scientist at the Energy Department’s Pacific Northwest Laboratory.

Changing the accounting system poses a political challenge, as evidenced by the criticism bioenergy producers heaped on the report.

Tom Buis, chief executive of the ethanol trade association Growth Energy, said his group opposes a change in accounting procedures.

“In truth, there’s no new science in this report,” he said in a statement. “It’s a policy proposal, trying to get a new standard that would limit the ability of developing countries to provide food and fuel — and would keep our own nation addicted to imported oil.”

House leaders realized they needed to make a change before passage of the climate bill co-written by Energy and Commerce Chairman Henry A. Waxman (D-Calif.) and Rep. Edward J. Markey (D-Mass.), but they ran out of time. In a June 24 letter to House Speaker Nancy Pelosi (D-Calif.), Waxman and Agriculture Committee Chairman Collin C. Peterson (D-Minn.) wrote: “We do not have time to resolve these details before House passage. . . . But we want you to know that we are both committed to developing appropriate provisions so that we can have a complete resolution of this important matter.”

Climate legislation introduced recently by Democratic Sens. John F. Kerry (Mass.) and Barbara Boxer (Calif.) includes the same calculation method as the Waxman-Markey bill.

Hamburg said his organization is beginning to set up a process in which an array of interest groups, including farmers, forest owners and scientists can meet to try to craft a solution to the problem.

Dan Lashof, director of the Natural Resources Defense Council’s climate center, said he hopes the paper in Science will prompt “some focus on the need to address this,” adding: “People don’t really understand the challenge of addressing emissions from bioenergy in a comprehensive and scientifically valid way.”

Timothy D. Searchinger, the paper’s lead author and a Princeton University research scholar, said it is urgent that officials correct the accounting issue before these incentives make the less environmentally friendly forms of bioenergy more entrenched.

“You think it’s hard to solve now?” he asked. “If you don’t solve it now, it just doesn’t get solved.”

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