Durable-goods orders snap back in April

MarketWatchMay 25, 2013 

WASHINGTON -- Higher demand for autos, airplanes and military wares boosted orders for long-lasting goods in April, but bookings also rose in most other industries in a positive sign for U.S. manufacturers.

Orders for durable goods climbed 3.3 percent last month to a seasonally adjusted $222.6 billion after a revised 5.9 percent drop in March, the Commerce Department said Friday. Economists polled by MarketWatch had forecast a 1.4 percent increase.

If the volatile transportation sector is excluded, orders rose a smaller 1.3 percent, but demand was still broad-based. Almost every key sector reported higher orders.

"The report was strong overall with every sector posting gains after uniform declines in March," said economist Bricklin Dwyer of BNP Paribas.

The latest report offers a ray of hope for a segment of the economy that has shown softness over the past few months in an array of other indicators. American manufacturers have been boxed in by a lackluster economy at home and weakness in key export markets overseas. Exports have declined since last fall to break a three-year run of higher orders for U.S.-made goods.

Orders rose most sharply in the commercial-airline segment, up 18.1 percent in April. Boeing received orders for 51 jets last month, up from 39 in March.

Orders for news cars and trucks also rebounded for a 1.9 percent increase after a soft 0.5 percent gain in March.

Demand also increased for metals, machinery, computers, electronics and defense hardware. Defense bookings surged --a mild surprise, given automatic spending cuts required at the Pentagon under a law known as the sequester. Yet the increase in military orders likely reflects a temporary spring back after several quarters of slower defense spending.

Orders for core capital goods, a key barometer of private-sector business investment, jumped 1.2 percent after a 0.9 percent rise in March.

Yet shipments of core capital goods, a category used to calculate quarterly gross domestic product, fell 1.5 percent in April. That sets up the second quarter to show slower growth compared to the first three months of the year.

Orders for March, meanwhile, were revised to a 5.9 percent decline from a prior reading of a 6.9 percent drop.

The durables report is extremely volatile and subject to large revisions, so economists look at longer trends. In the first four months of 2013, orders for durable goods have risen an unadjusted 0.7 percent compared to the same period in 2012. Core orders are up a stronger 1.8 percent on the same basis.

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