manufacturing a product

Slowdown in US Business-Equipment Orders May Weigh on Growth

The broad slowdown in equipment orders and shipments raises the risk that business investment will provide less of a boost than anticipated to the economic rebound this quarter.

An unexpected decline in U.S. orders for business equipment in May indicates cooling capital-goods investment may weigh on second-quarter economic growth, Commerce Department data showed Monday.

Durable Goods Highlights

Orders for non-military capital goods excluding aircraft fell 0.2% (est. 0.4% gain) after a 0.2% increase in prior month.

Shipments of those goods, which are used to calculate gross domestic product, fell 0.2% after 0.1% gain.

Bookings for all durable goods fell 1.1% (est. 0.6% drop) following 0.9% decline; excluding transportation-equipment demand, which is volatile,  orders rose 0.1% (est. 0.4% gain).

Key Takeaways

The broad slowdown in equipment orders and shipments raises the risk that business investment will provide less of a boost than anticipated to the economic rebound this quarter, leaving the heavy lifting to household spending. The outlook for capital-goods production is clouded by cooling automobile sales, while overseas markets -- though improving -- are yet to show the kind of demand acceleration that would spur exports of U.S.-made goods.

Other Details

  • Orders for non-defense capital goods excluding aircraft dropped most since December; durable-goods orders fell most since November.
  • Orders for motor vehicles and parts rose 1.2%; compares with industry data showing sales of cars and light trucks slowed in May for the fourth time in the past five months.
  • Orders for fabricated metal products fell 0.2% after a 1% decline; machinery orders rose 0.6%.
  • Computer and electronic-products orders decreased 0.2%.
  • Bookings for civilian aircraft and parts dropped 11.7%; defense capital-goods orders fell 8.2%.
  • Durable-goods inventories rose 0.2%; unfilled orders for non-defense capital goods excluding aircraft advanced 0.2%.

By Shobhana Chandra

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish