Orders for U.S. durable goods in April jumped more than forecast as a rebound in auto demand and surge in defense spending overshadowed declines in business equipment that signals investment will be one of the last areas of the economy to recover. The 1.9 percent increase reported by the Commerce Department today in Washington was the largest since December 2007, and followed a revised 2.1 percent drop in March that was more than twice as large as previously estimated. Excluding transportation, orders climbed 0.8 percent. Companies, which have record levels of spare capacity, will continue to cut back on buying capital equipment such as computers until sales show sustained gains. The worst credit crisis since the Great Depression has prompted economists to scale back forecasts for economic growth in the second half of the year. ``It's hard to identify what the source for a big, lasting turnaround would be,'' Tim Quinlan, an economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. ``I haven't seen anything that would suggest to me yet that businesses are ready to roll up their sleeves and start spending money.'' Economists forecast orders would rise 0.5 percent, according to the median of 73 estimates in a Bloomberg News survey, after a previously reported 0.8 percent decline in March. Projections ranged from a drop of 2.4 percent to a gain of 3.8 percent. Excluding transportation equipment, orders were forecast to fall 0.3 percent after a 0.7 percent decrease the prior month, according to the Bloomberg survey. Projections ranged from a drop of 3.3 percent to an increase of 1 percent. Capital Goods Slump Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, dropped 1.5 percent after a 1.4 percent decrease the prior month. Commerce previously estimated such orders in March had risen 0.4 percent. Shipments of those items, used in calculating gross domestic product, slumped 2.1 percent, the sixth decrease in the last seven months. The decline may prompt some economists to lower their forecasts for economic growth this quarter. Some private economists have tempered their projections for the pace of recovery. Economists surveyed by the National Association of Business Economics forecast the economy will grow at a 0.7 percent pace in the third quarter and 1.8 percent the final three months, compared with 1 percent and 2.1 percent gains projected in February, according to figures released yesterday. Orders excluding defense equipment increased 1 percent and bookings for military gear jumped 23 percent. Autos, Aircraft Orders for transportation equipment climbed 5.4 percent, led by automakers. Demand for commercial aircraft, often a volatile category, decreased 6.8 percent, running counter to industry figures. Boeing Co., the world's second biggest airplane maker, said May 13 it received 17 aircraft orders in April, up from 6 placed the month earlier. Deliveries for the month totaled 39 aircraft, down from the 50 shipped in March. Even so, Boeing is cutting 10,000 jobs, reducing production of the 777 wide-body plane in 2010 and postponing plans to increase output of the 747 jumbo-jet and 767 models because the recession has curbed demand and dried up airlines' financing options. Chief Financial Officer James Bell said May 21 that the company's finance arm could access the debt market for about $800 million this year to help customers fund plane purchases and stem order cancellations, which have paralleled sales. Automakers also continue to struggle. Chrysler LLC this month idled its 22 U.S. plants after filing for bankruptcy. General Motors Corp. also has cut output as a bankruptcy deadline looms. Computer Demand Orders for computers decreased 6.4 percent following a 4.7 percent drop in March, today's report showed. Federal Reserve policy makers, in a statement following their April meeting, cited improved financial conditions, stronger business and household sentiment, and expectations of an increase in industrial production to replace inventories, as reasons why the pace of economic contraction will probably ease. LSI Corp. Chief Executive Officer Abhi Talwalkar said calling the bottom now would be ``too bold of a statement,'' even as sales in the chip industry were improving. Still, ``I do believe we won't experience another freefall like we did in the last quarter and a half,'' Talwalkar said in a May 18 interview. Milpitas, California-based LSI makes computer hard drives, servers and networking systems.

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