Tags: Durable | Goods | Orders | Economy

Falling Durable-Goods Orders Reflect Stalled Investment

Falling Durable-Goods Orders Reflect Stalled Investment

Friday, 26 May 2017 08:41 AM

New orders for key U.S.-made capital goods were unexpectedly unchanged in April and shipments slipped, suggesting cooling manufacturing activity that could further temper expectations of a sharp rebound in economic growth in the second quarter.

The Commerce Department said on Friday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged for the second straight month. These so-called core capital goods orders were previously reported to have increased 0.5 percent in March.

Shipments of core capital goods dipped 0.1 percent after rising 0.2 percent in March. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.

Economists polled by Reuters had forecast core capital goods orders rising 0.5 percent last month.

A recovering energy sector has been boosting demand for equipment such as machinery, helping to lift manufacturing. Data this month showed manufacturing output recording its biggest increase in three years in April.

The figures on orders and shipments may raise concern that a pickup in first-quarter business investment was temporary. The data may also indicate that companies may be growing reluctant to move forward on expansion plans until lawmakers in Washington come to an agreement on tax legislation and infrastructure spending.

But manufacturing surveys have softened in recent months, pointing to a moderation in factory activity. Manufacturing accounts for about 12 percent of the U.S. economy.

The weak core capital goods orders report added to April data on retail sales, the goods trade deficit and inventory investment in suggesting the rebound in economic growth in the second quarter would probably not be robust. The economy grew at a 1.2 percent annualized rate in the first quarter.

Last month, orders for machinery fell 0.8 percent while shipments increased 0.3 percent. Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, fell 0.7 percent after jumping 2.3 percent in March.

April's drop followed four straight monthly increases. Civilian aircraft orders fell 9.2 percent and bookings for defense aircraft rose 7.1 percent. Orders for motor vehicles and parts rose 0.3 percent after two straight months of decreases.

© 2019 Thomson/Reuters. All rights reserved.

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U.S. orders for long-lasting manufactured goods dropped in April for the first time in five months, and a key category that tracks business investment went nowhere for the second straight month.
Durable, Goods, Orders, Economy
Friday, 26 May 2017 08:41 AM
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