Durable goods orders in the U.S. decreased by 3.6 percent -- more than forecast -- in April, a Commerce Department report revealed today, reports Bloomberg.
The data, released in Washington, reflect a downturn in aircraft demand and disruptions in supplies of auto parts arising from the earthquake in Japan.
The 3.6 percent decrease in bookings for goods supposed to last at least three years was the biggest since October, trailing a 4.4 percent surge in March that was bigger than previously estimated.
Economists projected a 2.5 percent April decline, according to the median forecast in a Bloomberg News survey.
Bookings for Boeing Co. (BA) aircraft tapered off last month and vehicle makers slowed production due to a components shortage that may actually be temporary only as Japanese factories recover.
Meanwhile, to the contrary, rising overseas sales at manufacturers such as Deere & Co. (DE) and General Electric Co. (GE) indicate the industry will keep driving the U.S. expansion, Bloomberg reports.
Stephen Stanley is the chief economist at Pierpont Securities LLC in Stamford, Connecticut.
He said, “Manufacturing is likely to moderate from the explosive pace of growth in the past few months.”
At the same time, “consumer demand and investment demand are both doing well right now,” he said.
Orders excluding the highly changeable transportation equipment category decreased 1.5 percent in April after a 2.5 percent gain.
The median projection in the Bloomberg survey was for a 0.5 percent rise, with estimates ranging from a drop of 1.2 percent to an increase of 1.8 percent, reports Bloomberg.
Estimates of total durable goods orders in the Bloomberg survey of 81 economists ranged from a drop of 5.7 percent to a gain of 2 percent.
While manufacturing has led the economic recovery, housing has struggled.
The Washington-based Federal Housing Finance Agency said today home prices decreased by 2.5 percent in the first quarter from the prior three months.
Chicago-based Boeing, the world’s largest aerospace company, disclosed it received two orders last month compared with 98 in March, Bloomberg reports.
Today’s report showed a 30 percent dip in civilian plane orders and an 8.9 percent drop in military aircraft. Bookings excluding military equipment fell 3.6 percent in April.
The report revealed demand for machinery, fabricated metals, electrical equipment and computers and related products all fell.
Today’s report showed bookings for motor vehicles and parts dropped 4.5 percent in April, the most since August 2010, following a 6.6 percent gain.
Fed officials are discussing strategies to begin tightening policy after completing the purchase of $600 billion in U.S. Treasuries by the end of June, reports Bloomberg.
James Bullard, the President of the Federal Reserve Bank of St. Louis, said that while first-quarter growth was a disappointment, the slow pace isn’t likely to last.
“I think the economy will be reasonably robust in the second quarter and the second half of the year,” he said in a May 23 speech.
Bullard said manufacturing has been “fairly good” and household spending has “held up well,” reports Bloomberg.
