U.S. Durable Goods Up in May After Two Month Decline

Orders rose 1.1% in May over the previous month, following a revised 0.2% dip in April and a 3.7% drop in March.

By . Agence France-Presse

June 27, 2012

New orders for U.S. durable goods rebounded in May, according to Commerce Department data released on June 17. Orders for products such as computers and equipment designed to last at least three years rose 1.1% in May over the previous month, following a revised 0.2% dip in April and a 3.7% drop in March.

"The increase reverses two consecutive monthly decreases, "said Don Norman, senior economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). "In addition, it runs counter to increasing signs in recent months that manufacturing activity hit a brick wall early in 2012 as growth slowed in response to the rise in oil prices in the first quarter of 2012, continuing economic problems in the Eurozone, and even slowing growth in China."

Aircraft and parts orders led the gains in May, with orders for defense aircraft surging 6.9% and those for civilian planes up 4.9%.

Excluding defense, orders rose 0.7%.

"There are caveats, however," Norman added. "Much of the increase was due to a 2.7% increase in transportation orders. When transportation orders are excluded, durable goods orders increased by just 0.4%. Further the monthly durable goods orders series is volatile and a one-month gain does not constitute a trend. The June data on durable goods orders indicate that overall manufacturing sector growth continues, but at a markedly slower pace than recorded at the end of 2011 and the first two months of 2012."

Copyright Agence France-Presse, 2012