Tags: Durable | Goods | Orders | Investment

Durable Goods Orders Rise 1.1% as Business Investment Increases

Wednesday, 27 June 2012 08:49 AM

Businesses placed more orders with U.S. factories for long-lasting manufactured goods in May. The increase suggests companies remain confident in the U.S. economy despite a weaker job market and a likely recession in Europe.

The Commerce Department said Wednesday that orders for durable goods rose 1.1 percent in May after two months of declines.

And so-called core capital goods, which signal business investment plans, increased 1.6 percent. That also followed two months of declines, which raised concerns that businesses were losing confidence in the economy. Companies ordered more heavy machinery and computers in May.

Durable goods are items that are expected to last at least three years. Orders in May rose to $217.2 billion, 46 percent above the recession low hit in April 2009. Orders are still 11.4 percent below their 2007 peak.

U.S. manufacturing has been a key driver of growth since the recession ended three years ago. But Europe's escalating debt crisis has weakened demand for U.S. exports, which has slowed factory output. And several other reports suggest the sector may be struggling.

Factories produced less in May than April, the Federal Reserve said earlier this month. Automakers cut back on output for the first time in six months.

In June, manufacturing activity barely grew in the New York region and contracted sharply in the Philadelphia area, according to surveys by regional Federal Reserve banks.

Manufacturers added 12,000 jobs in May, the eighth straight gain. But overall, the economy generated just 69,000 jobs last month, the fewest jobs in a year.

Employers have added an average of just 73,000 jobs a month in April and May. That followed average gains of 226,000 a month in the first three months of the year.

With job growth weaker and the unemployment rate still high, consumers have pulled back on spending and businesses appear less confident about the economy. They are placing fewer orders at factories, which has slowed manufacturing output.

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Wednesday, 27 June 2012 08:49 AM
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