Reflecting a steep drop in orders for transportation equipment, the Commerce Department released a report on Thursday showing an unexpected decrease in new orders for U.S. manufactured durable goods in the month of April.
The report showed durable goods orders tumbled by 1.3 percent in April after jumping by an upwardly revised 1.3 percent in March.
The pullback surprised economists, who had expected durable goods orders to climb by 0.7 percent compared to the 0.8 percent increase that had been reported for the previous month.
The unexpected decrease in durable goods orders came as volatile orders for transportation equipment plunged by 6.7 percent in April after slumping 3.1 percent in March.
Orders for motor vehicles and parts led the way lower, plummeting by 6.2 percent due to the impact of semiconductor shortages.
Excluding the steep drop in orders for transportation equipment, however, durable goods orders shot up by 1.0 percent in April after spiking by 3.2 percent in March. Economists had expected 0.8 percent growth.
Notable increases in orders for primary metals, machinery, and fabricated metal products more than offset a decrease in orders for electrical equipment, which may also be semiconductor-related.
The report also showed orders for non-defense capital goods excluding aircraft, a key indicator of business spending, surged up by 2.3 percent in April after jumping by 1.6 percent in March.
Shipments in the same category, which is the source data for equipment investment in GDP, also increased by 0.9 percent in April after shooting up by 1.6 percent in the previous month.
“Despite the disappointing decline in headline orders, this report suggests the outlook for second-quarter business equipment investment is arguably even more positive than we previously anticipated,” said Paul Ashworth, Chief U.S. Economist at Capital Economics.
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