RTTNews - Orders for durable goods increased by much more than expected in the month of April, according to a report released by the Commerce Department on Thursday, although the report also showed a substantial downward revision to the drop in orders seen in March.
The report showed that durable goods orders jumped 1.9 percent in April following a downwardly revised 2.1 percent decrease in March. Economists had expected orders to edge up 0.5 percent compared to the 0.8 percent drop that had been reported for the previous month.
A sharp rise in orders for transportation equipment contributed to the rebound, with orders for transportation equipment jumping 5.4 percent in April after coming in unchanged in March.
Orders for motor vehicles and parts showed a notable 2.7 percent increase after six consecutive monthly declines.
Peter Boockvar, equity strategist at Miller Tabak said the rebound in orders for motor vehicles and parts fits with the thesis that the massive inventory drawdown seen may be followed by replenishment.
Excluding the jump in orders for transportation equipment, durable goods orders increased by a more modest 0.8 percent in April compared to a revised 2.7 percent drop in March.
While orders for fabricated metal products and machinery showed notable increases, the growth was partly offset by a considerable drop in orders for computers and electronic products.
The Commerce Department also said that shipments of durable goods edged down 0.2 percent in April after falling by 1.9 percent in March. This marked the ninth consecutive monthly decrease in shipments of durable goods.
Commerzbank analyst Bernd Weidensteiner said the continued weakness in shipments points to an ongoing decline of investment in machinery and equipment in the second quarter.
Additionally, the report showed that orders for non-defense capital goods, excluding aircraft, which is seen as an indicator of business spending, fell 1.5 percent in April compared to a revised 1.4 percent decrease in March.
Next Wednesday, the Commerce Department is due to release its report on factory orders in the month of April, which includes orders for both durable and non-durable goods.
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