General Dynamics Land Systems
U.S. orders for long-lasting manufactured goods rebounded in April, buoyed by more demand for military and civilian aircraft and an increase in business investment.The Commerce Department Friday said durable goods orders rose 3.3 percent last month after a 5.9 decline in March. (Photo: M1 Abrams tanks sit on the assembly line at a plant in Lima, Ohio).
U.S. orders for long-lasting manufactured goods rebounded in April, buoyed by more demand for aircraft and an increase in products that signal business investment.
Orders for durable goods, items expected to last at least three years, rose 3.3 percent last month from March, the Commerce Department said Friday. That followed a 5.9 decline in March.
A measure of business investment plans increased 1.2 percent after a 0.9 percent gain in March. Companies ordered more machinery and electronic products last month, typically signs of confidence in the economy.
More spending by businesses could ease fears that manufacturing will weaken further this year and weigh on economic growth.
Factories had been seeing fewer orders earlier this year, in part because slower global growth had reduced demand for U.S. exports. Economists had also worried that across-the-board federal spending cuts and higher taxes might prompt businesses to cut back on orders.
Paul Ashworth, an economist with Capital Economics, said the April report suggests economic growth is holding up. He predicts growth in the April-June quarter will be at a rate of 2 percent to 2.5 percent. That's not much lower than the 2.5 percent rate reported for the January-March quarter.
The April increase pushed total orders to $222.6 billion on a seasonally adjusted basis. That is 6.5 percent above the level of a year ago.
Orders for transportation goods gained 8.1 percent, reflecting a 16.1 percent jump in demand for commercial aircraft and a 53.3 percent increase in orders for military aircraft. Orders for motor vehicles increased 1.9 percent.
Excluding the volatile transportation category, orders rose 1.3 percent in April. That followed a 1.7 percent decline in March.
Still, other reports showed that factories continued to struggle in April.
The Institute for Supply Management reported factory activity barely expanded in April, held back by weaker hiring and less company stockpiling.
And manufacturing output dropped 0.4 percent last month, the Federal Reserve reported earlier this month. Auto companies cranked out fewer cars, factories made fewer consumer goods and most other industries reduced output.
One bright spot for the economy has been the American consumer, who has shown surprising resilience this year despite paying higher Social Security taxes.
Consumer spending rose from January through March at the fastest pace in more than two years. Auto sales have been rising over the past year. And Americans boosted their spending at retailers in April, from cars and clothes to electronics and appliances.
A better job market and a sustained recovery in housing have helped soften some of the impact of the tax increase. Since November, employers have added an average 208,000 jobs a month. That's up from just 138,000 jobs a month during the previous six months.
The overall economy grew at an annual rate of 2.5 percent in the January-March quarter, buoyed by the fastest rise in consumer spending in more than two years. Many economists believe growth is slowing to around 2 percent in the current April-June quarter and could stay near or slightly above that level for the rest of the year.