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US durable goods orders drop but key category shows strength

May 27, 2018 | By The Canadian Press

Washington – Orders for long-lasting manufactured goods fell in April amid weaker demand for aircraft. But a key category that tracks business investment rose after sliding in March – a sign of health for American industry.

The Commerce Department says U.S. orders for durable goods – manufactured items from washing machines to battleships that are meant to last at least three years – fell 1.7 per cent from March. The figure was pushed down by a 29 per cent plunge in orders for civilian aircraft.

But transportation orders are volatile and bounce around from month to month. Without them, durable goods orders rose 0.9 per cent. Orders for computers, appliances and other electrical equipment and motor vehicles all rose.

“Business capital spending on key industrial equipment rose back in April to start the second quarter on a positive note,” Chris Rupkey, chief financial economist at MUFG, wrote in a research note, adding: “The economy is firing on cylinders this quarter with both consumers and business investment adding to the mix on economic growth.”


Orders for civilian capital goods excluding aircraft, a number that tracks business investment, rose 1 per cent in April after dropping 0.9 per cent in March.

U.S. industry is healthy, helped by an expanding world economy and robust spending by American consumers. But the outlook may be cloudier. The dollar has been rising, which should drive up the price of U.S. products in foreign markets. Manufacturers also face uncertainty surrounding the Trump administration’s decision to slap tariffs on imported steel and aluminum.

The Federal Reserve reported last week that U.S. factory production rose in April after a flat reading in March. A broader measure of industrial production, which includes mining and utilities, rose 0.7 per cent.



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