Washington: New orders for long-lasting US manufactured goods recorded their largest decline in six months in April as aircraft and motor vehicle bookings tumbled, pointing to some cooling in factory activity.
The Commerce Department said on Wednesday durable goods orders dropped 3.6%, worse than economists’ expectations for a 2.2% fall. March’s orders were revised up to 4.4% from a 4.1% increase.
While durable goods orders are extremely volatile, details of the report were the latest in a series to indicate the economy remains trapped in the soft patch.
“It’s another modestly disappointing data point in a long series of slightly disappointing data points that we’ve gotten in the last month,” said Fred Dickson, chief market strategist at DA Davidson & Co. in Lake Oswego, Oregon.
“(It’s) not indicative of an economic downturn, just kind of paints a picture that the economy is in a momentary lull.”
So far, data ranging from retail sales to industrial production all suggest the economy continued to lose momentum early into the second quarter.
The government is expected to report on Thursday that the economy grew at a still sluggish 2.1% annual rate in the first quarter, according to a Reuters survey, rather than the 1.8% pace it estimated last month.
Manufacturing activity, which has led the recovery, has been dampened somewhat by a shortage of motor vehicle parts following an earthquake in Japan.
US stock index futures extended losses on the data, while government bond prices weakened slightly. The dollar held gains versus the euro and the yen.
Orders last month were pulled down by a 4.5% fall in motor vehicle bookings, the largest decline since August, likely tracking an 8.9% dive in auto production during that month.
US manufacturing contracted for the first time in 10 months in April as a result of supply chain disruptions in the wake of the March earthquake.
Orders were also weighed down by a 30% plunge in volatile aircraft bookings. Boeing took in just two aircraft orders, sharply down from the 98 it received in March, according to information posted on the plane maker’s website.
Excluding transportation, durable goods orders unexpectedly fell 1.5% after a revised 2.5% rise in March, previously reported as a 2.3% increase.
Economists had expected this category to rise 0.5%.
The report showed weakness across the board, with big declines in orders for machinery, capital goods, defense aircraft, electronic equipment and computers. However, orders for computers and electronic products rose.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 2.6% last month after an upwardly revised 5.4 % increase in March.
“The April level is about where it was in the first quarter so it suggests that firms’ capital spending inclinations are pretty flat or sluggish in the second quarter,” said Cary Leahey, a senior economist at Decision Economics in New York.
Economists had expected a 0.2% gain from a previously reported 4.3% rise.
Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, fell 1.7%.