Orders for long-lasting manufactured goods in the United States bounced-back in April after a sharp decline in March, as the aircraft segment once again swelled in demand, according to a report from the Commerce Department on Friday.
The U.S. Census Bureau said that new orders for durable goods, products from airplanes to household appliances that are designed to last more than three years, rose by 3.3 percent to $222.6 billion during April. In March, new orders dropped by 5.9 percent with the main culprit being reduced orders the volatile transportation component.
Economists were only expecting a 1.5 percent rise during April.
New orders for nondefense aircraft and parts jumped by 18.1 percent in April, following a 43.0 percent drop in March. Orders for defense aircraft and parts rose 53.3 percent after an 8.0 percent decline the prior month.
Excluding the transportation component, new orders improved by 1.3 percent, marking the first increase since January. Most all of the key sectors showed higher orders for the month. Bookings for machinery rose by 1.9 percent after declining 1.8 percent the month prior. New orders for computers and related products were up 3.6 percent after a 0.5 percent contraction in March. Electrical equipment, appliances and components built upon 2.0 percent growth in March to rise 5.7 percent in April.
Not including defense, new orders increased 2.1 percent.
Orders excluding defense capital goods and aircraft, a barometer of business investment and factory demand, grew by 1.2 percent, following an upwardly revised 0.9 percent gain in March. Shipments for items in this category (called “core capital goods”), which are used to compute GDP, were a blemish on the report, falling 1.5 percent in April after an increase of 0.5 percent in March.
Shipments in general were weak after two months of increases, declining 0.6 percent to $227.1 billion. Computer and electronic product shipments paced the drop with a 2.9 percent contraction.
Inventories rose for the third time in fourth month, up 0.4 percent to $377.9 billion, representing the highest level since the series was published on a NAICS basis in 1992. Inventories of transportation equipment led the rise with a 1.5 percent increase, the 32nd advance in the last 33 months.
On the whole, the durable goods report showed an underlying strength in manufacturing, but the softness in shipments will pare enthusiasm. Economist are still closely monitoring the lasting impact of monetary easing efforts of the Federal Reserve as well as budget cuts and tax hikes imposed by Washington as part of the sequester.
At the noon hour of Friday’s trading heading into the Memorial Day weekend, the Dow is down by 25, the S&P 500 is off by 5 points and the Nasdaq has given up 10 points. Unless there is a sharp reversal in afternoon trading, all three indexes are on pace to have their first red week after four consecutive weeks a gains.