US durable goods orders surge in April on aircraft

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US durable goods orders surge in April on aircraft

WASHINGTON - New orders for long-lasting U.S. manufactured goods excluding transportation unexpectedly fell in April, but a jump in overall orders to a 1-1/2 year-high offered assurance the economic recovery remained on track.

By (Reuters)

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Published: Wed 26 May 2010, 8:41 PM

Last updated: Mon 6 Apr 2015, 11:12 AM

New durable goods orders excluding transportation dropped 1 percent after rising by a revised 4.8 percent in March, the Commerce Department said on Wednesday.

Markets had expected new orders excluding transportation to rise 0.5 percent from a previously reported 3.5 percent rise.

Overall orders, however jumped 2.9 percent last month to their highest level since September 2008, boosted by a 228 percent increase in bookings for aircraft.

Markets had forecast orders increasing 1.3 percent.

However, analysts have been concerned that the debt crisis roiling Europe will hurt the global economy and slow the domestic recovery.

“We now have five quarters of increases, and that’s a good sign of transitioning from a recovery to sustainable growth,” said John Canally, investment strategist and economist at LPL Financial in Boston.

“It’s too early to gauge the impact of the European crisis ... probably have to wait until May or even July to see an impact.”

The U.S. dollar extended gains against the euro after the data. U.S. stock index futures remained higher, while U.S. Treasury debt prices held losses.

Boeing Co received 34 orders for the pricey 777 aircraft last month, according to information on the company’s website, though less than the 43 bookings for its 737 plane in March.

Durable goods orders are a leading indicator of manufacturing, which in turn provides a good measure for overall business health.

Manufacturing is leading the economy’s recovery from the worst recession since the 1930s, but consumers are now stepping up to the plate as the labor market improves.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 2.4 percent last month after a 6.5 percent increase in March. Markets had expected a 1 percent rise in April.

Durable goods inventories rose 0.7 percent after increasing 0.6 percent in March. Shipments, which go into the calculation of gross domestic product, rose 1.4 percent in April - advancing for a second straight month.

Unfilled orders rose 0.4 percent after slipping 0.1 percent in March.

Mortgage demand to buy homes down

Demand for loans to buy homes remained at 13-year lows last week, the Mortgage Bankers Association said in a separate report. However, mortgage applications to refinance home loans hit a seven-month high as rates neared record lows.

The subdued demand for mortgages to purchase homes comes in the wake of the April 30 deadline for prospective home owners to sign contracts on properties to benefit from a federal home-buyer tax credit. They have until the end of June to close contracts.



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