US durable goods orders up 0.8 percent in April

Published on NewsOK Modified: May 27, 2014 at 8:20 am •  Published: May 27, 2014

WASHINGTON (AP) — Orders to U.S. factories for long-lasting manufactured goods advanced for a third month in April, but much of the strength came from a big surge in demand for military aircraft. Orders in a category that signals business investment plans fell by the largest amount in three months.

Orders for durable manufactured goods rose 0.8 percent from the previous month after a 3.6 percent gain in March, the Commerce Department said Tuesday. The April strength stemmed from a big jump in demand for defense goods including airplanes. Excluding defense, orders would have fallen 0.8 percent in April.

The April result supports the view that the economy stands to benefit in the coming months from increased production at factories, which should bolster growth and spur further hiring.

Orders for core capital goods, a category viewed as a proxy for business investment plans, fell 1.2 percent in April. It was the weakest showing since a 1.9 percent January drop.

The harsh winter dragged overall economic growth to a barely discernible 0.1 percent in the January-March quarter. That figure will be updated on Thursday, and many economists believe it could slip into negative territory.

But economists are looking for a significant rebound in the April-June quarter, reflecting in part pent-up demand from consumers who put off purchases because of the bad weather. Many analysts say that growth in the spring quarter could come in as high as an annual rate of between 3.5 percent and 4 percent.

Economists were encouraged by the moderate increase in April orders, which was better than the decline they had been forecasting. They also took heart from solid upward revisions that showed more strength in March than previously believed.

"We would expect to see capital goods orders and shipments continuing to trend upwards," Amna Asaf, an economist at Capital Economics, said in a research note. "Second-quarter growth in equipment investment should be notably better."

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