Economists expect durable goods orders to have declined by 0.7 percent month-over-month.
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These so-called core capital goods orders were previously reported to have declined 0.6 percent in April and had been forecast rising 0.3 percent last month.
American businesses this spring continued to pull back on purchases of new equipment, a trend that could weigh on overall USA economic growth.
Grand Rapids, Mich. -based furniture maker Steelcase Inc. this week reported that its sales in the Americas were almost flat and orders were down compared with a year earlier in the quarter ended May 27, including a sharp decline in orders from energy-sector clients. On Friday, June 24, 2016, the Commerce Department releases its May report on durable goods.
New orders excluding defense decreased 0.9 percent on the month, as orders of nondefense capital goods fell 0.8 percent to $68.5 billion, which was partially offset by a 1.0 percent increase in new orders for nondefense aircraft and parts.
“For more than a year, businesses have remained sidelined, hesitant to invest in equipment, structure, and full-time, high-wage employees, a trend that has clearly continued into the second quarter”, she said.
“At an annual pace of 551,000 units, new home sales are up relative to the first few months of 2016 as well as past year”, said NAHB Chief Economist Robert Dietz.
Core capital goods shipments were previously reported to have increased 0.4 per cent in April.
Excluding the transportation sector orders were down by 0.3% over the month to $148.8bn (consensus: 0.1%).
Federal Reserve Chairwoman Janet Yellen, however, told lawmakers this week that soft business investment since the recession might reflect broader trends.
With business spending remaining weak, manufacturing is showing no signs of pulling out of the slump that started in mid-2014 which was precipitated by a surge in the US dollar.
Manufacturing accounts for about 12 percent of the USA economy.
Last month’s drop in durable goods orders was led by a 34.1% decline in military-aircraft orders.
There were declines in orders for machinery, primary metals, computers and electronic products as electrical equipment, appliances and components.
After the USA dollar retreated this year against the currencies of the United States’ main trading partners and with oil prices gradually rising, there had been hope that the worst of the manufacturing downturn was over.
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“For the USA industrial sector, the outlook for global demand looks weaker this morning than it did just a day ago given the added uncertainties surrounding the United Kingdom and euro area economies”, said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.
