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Durable Goods Orders Fall in April

The fourth drop in sixth months sparks little concern, though, because 'modest big-ticket spending has resumed after a very weak first quarter.'

WASHINGTON, D.C. – Orders for U.S. durable goods fell 0.5% in April, reversing March’s strong surge mainly on the back of falling aircraft orders, the Commerce Department reported. But with volatile transport orders stripped out, durable goods orders picked up 0.5% in April, the second straight gain after the winter’s chill on the U.S. economy.

Overall orders for durable goods were estimated at $235.5 billion for the month, down slightly less than $1.2 billion from March.

The underlying details showed promise: orders for machinery and other non-defense-related capital goods were strong, rising 1.0% in the month, after a 1.5% gain in March and a 5.1% contraction in February, suggesting U.S. and other manufacturers were growing optimistic about growth.

“The April report as a whole suggests that modest big-ticket spending has resumed after a very weak first quarter,” MAPI Foundation director of economic studies Cliff Waldman said. “The breadth of the improvement is noteworthy. Industry sectors that coordinate with multiple supply chains, such as primary and fabricated metals as well as machinery, all logged significant positive gains in April after disquieting contractions in the early months of the year.”

“Challenges continue to stand in the way of strong manufacturing performance, even as another brutal winter has come and gone and as the slowdown at western ports has been resolved. While Eurozone growth seems a bit firmer, financial stability issues are once again rearing their ugly head. Chinese growth continues to slow beyond expectations. And the elevated dollar is making a difficult world all the more difficult for U.S. goods producers.”

For the year to date, new orders were down 1.3% from 2014, with a key part of the reason being slower economic growth abroad that has dampened export orders.

Non-defense aircraft orders during the first four months of the year are down 16.7% from a year ago. By comparison, the largest category in durable goods, autos, mostly sold domestically, were up 8.7% in the first four months from a year ago.

“Two straight months of a pickup in core orders,” Jennifer Lee of BMO Capital markets said, “suggests that production will pick up in coming months.”

Read the full report.

Copyright Agence France-Presse, 2015

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