U.S. durable goods orders rise 1.9%, first gain in 2005 -
Wednesday, May 25, 2005 1:23:37 PM
afxpress.com
WASHINGTON (AFX) - Led by demand for airplanes, autos and computers, orders for new U.S.-made durable goods increased 1.9% in April after falling in the first three months of the year
Economists were expecting orders to rise 1.5%, according to a survey conducted by MarketWatch. Durable orders in March were revised to a 1.6% decline from 2.3% previously estimated
The financial markets brushed off the better-than-expected report. Stock futures were lower, while bonds continued to rally, with the 10-year yield falling to 4% briefly. The dollar was little changed. Shipments of durable goods increased 1.6% in April after a 0.2% gain in March. Durable goods are long-lived products, such as airplanes, cars, washing machines and machine tools. Orders are carefully watched for clues about the direction of both consumer and business spending. Orders for transportation goods jumped 8.2%, accounting for all the increase in total orders. Excluding transportation goods, orders fell 0.2% in April
Orders for core capital goods equipment rose 1.6% in April after large declines in February and March. A special tax break for investments in capital goods expired at the end of December, perhaps accelerating orders into 2004 at the expense of orders early in the year. Inventories of durable goods increased 0.1% in April, the 17th consecutive gain
Demand in April for durable goods was broad-based across sectors, outside of communications and primary metals
The durable-goods data are extremely erratic, often rising or falling by as much as 2 percentage points
The report gives ammunition to those who say that a soft patch that developed in the economy in the first months of the year was just a temporary bump on the road and not the sign of more fundamental problems
"This places the economy on good footing for growth in the second quarter," said Drew Matus, an economist for Lehman Bros
"The soft patch is not over," said Ian Shepherdson, chief U.S. economist for High Frequency Economics, who said March and April data taken together are "essentially flat." The factory sector has clearly slowed from the strong growth seen earlier in the recovery. Almost all the factory data show it: Manufacturing output fell in March and barely rose in April. Factory employment continues to decline. And most troubling, factory sentiment indexes - which try to capture the mood of corporate executives - have plunged. The Institute of Supply Management index is edging ever closer to 50%, the line separating growth from contraction in the sector
In April, orders for transportation goods rose 8.2%, including a 28.2% rise in aircraft orders and a 3.4% rise in motor vehicle orders. Shipments of transportation goods increased 3.5%
Orders for electronics excluding semiconductors fell 5.8%, as orders for communications equipment plunged 18.8%. Orders for computers rose 15.8%. Shipments of electronics rose 0.2%
Orders for machinery increased 2.2% while shipments rose 1.5%
Orders for electrical equipment increased 3.4% while shipments rose 1.9%
Orders for fabricated metals increased 1.7% while shipments increased 2.3% Orders for primary metals fell 0.9% while shipments fell 0.2% |
