Durable Goods Orders up 1.8% in May

New orders for non-defense capital goods rose 5%

New orders for manufactured durable goods increased $2.8 billion in May, the Commerce Department reported on June 24.

This was the hird increase in the last four months and followed a 1.8% April increase.

Machinery, up three of the last four months, had the largest increase, $1.6 billion or 7.7% to $22.5
billion.

"The May durable goods report adds a persuasive component to a growing body of evidence that U.S. economic activity is beginning to stabilize after a deep contraction," said Cliff Waldman, Economist for the Manufacturers Alliance/MAPI. "Stripping out either transportation or defense, two volatile categories of demand, new orders were up over 1%. And 'manufacturing with unfilled orders' had a sharp increase for the second consecutive month, indicating that demand is beginning to make a positive contribution to future production.

"The industrial composition of orders was mixed in May, although soaring demand for machinery is a positive sign for a broad U.S. economic recovery," Waldman added. "Further, new orders for non-defense capital goods excluding aircraft, a proxy for business equipment spending, rose by nearly 5% after a deep fall of nearly 3% the prior month, an indication that business confidence in future economic activity is starting to improve. Nonetheless, the still sharp declines in year-over-year activity across all categories of demand is a reminder that the U.S. factory sector still has a long way to go and is facing the headwind of one of the deepest global contractions in a generation."

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