Next Friday, the Commerce Department is scheduled to release a separate report on April factory orders, which include orders for both durable and non-durable goods.
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Orders for civilian aircraft soared 64.9 per cent. Orders for motor vehicles and parts increased 2.9 per cent.
In contrast to orders, shipments of durable goods increased 1.6% in April from March, the first monthly improvement following two straight monthly declines. Economists surveyed by The Wall Street Journal had expected overall orders to increase only 0.7%. And reporter Jeffrey Bartash of MarketWatch notes core orders for capital goods continued to decline.
Total durable goods orders rose to $235.9 billion in April, compared to $228.3 billion the previous month. “Nevertheless, the weak performance in business capital investment activity suggests that this segment remains a source of drag for the US economic recovery”, said Millan Mulraine, deputy chief economist at TD Securities in NY. Unfilled orders increased 0.6 percent after being flat in March.
“At this point, corporations remain hesitant to invest in equipment, structures, and certainly high-wage, full-time employees”, Lindsey Piegza, chief economist at Stifel Fixed Income, wrote in a research note Thursday.
Going forward, she expects that “without ample development and innovation resulting in a stronger pace of hiring, there is little hope of maintaining the current moderate trend of growth and employment, let alone gaining momentum from here”.
Durable-goods figures can swing widely from month to month and are subject to large revisions. Year-over-year business investment dropped 6.7%, the 14th month of declines in the past 16 months.
A slew of data out Thursday generally signaled that the USA economy once again is rebounding in the second quarter after an anemic start to the year.
But America’s goods deficit widened last month, as imports spiked more than 2.3 percent.
“The consumer seems to be spending freely, but business investment in the economy’s future is not so hot right now”, said Chris Rupkey, chief financial economist at MUFG Union Bank in NY.
“Manufacturing has indeed bottomed out and with a gradual improving trend emerging, the exact degree of which remains to be ascertained in the period ahead”, said Anthony Karydakis, chief economic strategist at Miller Tabak in NY.
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The Institute for Supply Management reported that its closely watched gauge of manufacturing activity expanded for a second month in April. And at least in the immediate future, that doesn’t look like it’ll change anytime soon. This increase, up three of the last four months, followed a 1.9 percent March increase.
