Durable goods orders drop
Slow transportation orders lead to 2.3%
overall dip in April, surprising analysts
May 26, 1999: 1:13 p.m. ET
NEW YORK (CNNfn) - A sharp drop in demand for
transportation equipment reduced U.S. durable goods
orders by a surprising 2.3 percent during April, a sharp
reversal from the 2.7 percent increase posted the
month before, the Commerce Department reported
Wednesday.
Analysts surveyed by Reuters had been expecting a
gain of 0.3 percent during April. The March
percentage increase was revised down from the
originally reported 2.9 percent.
Total orders of U.S. manufactured goods fell to a
seasonally adjusted $194.38 billion during April, down
from the revised $198.93 billion figure posted during
March.
Manufacturing remains strong
Still, orders excluding transportation products rose
0.9 percent after climbing 2.0 percent during March,
providing analysts with yet another indication that the
manufacturing sector is slowly righting itself amidst
improved economic conditions overseas.
Earlier this month, the National Association of
Purchasing Management announced its index
measuring new orders in the manufacturing sector grew
for the third consecutive month during April, while the
Federal Reserve reported manufacturing output hit a
six-month high during the same period.
Analysts believe Wednesday's durable goods
report is not only strong enough to reinforce the
industry's improved fortunes, but also weak enough --
because of the overall reduction -- to stave off a
Federal Reserve rise in interest rates, for now.
"It certainly takes the edge off the possibility of
them doing something soon," Rosanne Cahn, chief
equity economist with Credit Suisse First Boston, told
CNNfn. "There is no reason to raise U.S. interest rates
without an inflation problem and risk some of the
customers for some of the overseas economies. They
need us to buy their goods."
U.S. markets seemed to agree. After a choppy
morning, U.S. stocks traded higher by midday while
the benchmark 30-year Treasury bond remained down
13/32 of a point in price as the yield edged up to 5.74
percent.
Aircraft orders to blame
Overall, orders of costly transportation goods,
which account for more than one-fifth of the total
monthly orders, tumbled 12.4 percent after posting a
4.7 percent gain during March.
Although specific industry figures won't be released
for another week, a Commerce Department
spokesman said a sharp decline in aircraft and aircraft
part orders accounted for roughly half the $5.9 billion
decrease in transportation goods orders from March
to April.
The other three transportation sectors -- motor
vehicles and motor vehicle parts, shipbuilding, and
railroad and other equipment -- all declined as well,
but not as significantly, the spokesman said.
As for durable goods, industrial machinery and
equipment orders showed a strong increase, climbing
1.3 percent following a 0.6 percent decrease during
March, while primary metal orders inched up 0.2
percent.
Excluding defense-related items, durable goods
orders fell by only 0.1 percent to $189.44 billion.
Total durable goods shipments, excluding a $1.2
billion decline in transportation equipment, were flat,
but remain 5 percent above last year's pace through
April.
|
