Only A Short Slowdown In The U.S.?

New orders for U.S. manufactured durable goods, generally big-ticket items that are designed to last three years or more, surged in April after three consecutive monthly declines. In a report released on May 25, the U.S. Commerce Department valued new orders for manufactured durables at a seasonally adjusted $200.3 billion, up 1.9% from March's total of $196.6 billion. The percentage increase was significantly above the 1.1% gain that economists generally expected.

David Huether, chief economist of the Washington, D.C.-based National Association of Manufacturers, says the surge "suggests manufacturing is emerging from the soft patch it went through in the first three months of the year."

But it's premature to pronounce the end of America's most recent economic slowdown. Although new orders for computers posted a 15.8% month-to-month gain and fabricated metals, machinery, electrical equipment and appliances had gains in the low single digits, the standout new-order increases were in non-defense aircraft and parts, up 28.2%, and defense aircraft and parts, up 26.3%. Indeed, take transportation out of the total and new orders for U.S. manufactured durables fell two-tenths of a percentage point last month. New orders for communications equipment alone were down 18.8%. "It does not take much digging beneath the surface of [the] report to see that there is still a soft underbelly in the business sector," says Sheryl King, a senior economist at Merrill Lynch & Co., New York.

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