BLBG:Orders for U.S. Durable Goods Rose More Than Forecast in May
Orders for U.S. durable goods rose more than forecast in May, reflecting broad-based gains that signal manufacturing is stabilizing.
Bookings for goods meant to last at least three years climbed 3.6 percent for a second month, the Commerce Department reported today in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 3 percent increase. Excluding transportation equipment, where demand is volatile month to month, orders advanced 0.7 percent, also topping projections.
Growing demand for cars and trucks and gains in homebuilding are helping counter weakness in export markets, benefiting manufacturers such as BorgWarner Inc. (BWA) and United Technologies Corp. (UTX) Businesses may also decide to replace aging equipment, which will help bolster expansion in the second half of 2013.
“Manufacturing is still expanding,” Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “I expect things to look better at the end of the year.”
Estimates for durable goods in the Bloomberg survey ranged from a drop of 2.4 percent to a 9.2 percent gain.
Today’s figures showed bookings for commercial aircraft jumped 51 percent after climbing 18.3 percent in April. Chicago-based Boeing Co. received 232 aircraft orders in May, up from 51 in April.
Orders for automobiles and parts declined 1.2 percent after a 2.4 percent advance in April. Cars and light trucks sold at a 15.2 million annualized rate in May, a 2.4 percent increase from the prior month, according to industry figures.
Excluding Transportation
Excluding transportation equipment, bookings climbed for second month following a 1.7 percent increase in April that was larger than previously reported. The median forecast in the Bloomberg survey projected no change last month.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in computers, electronics and other equipment, climbed 1.1 percent in May after rising 1.2 percent the prior month.
Shipments of those products, a measure used in calculating gross domestic product, rose 1.7 percent, the biggest gain since November, after falling 2 percent in April.
The U.S. economy, the world’s largest, will grow at a 1.7 percent annualized rate this quarter after expanding at a 2.4 percent pace in the previous two months, according to the median forecast of economists surveyed by Bloomberg earlier this month.
Fed’s View
Federal Reserve Chairman Ben S. Bernanke said last week that the central bank will probably begin to pare its $85 billion in monthly asset purchases this year. The process, which would be tailored to the economy’s health, could be completed by mid 2014, by which time the jobless rate will probably have dropped to around 7 percent, he said.
The effects of government spending cuts that began March 1 may be holding back growth. At Steelcase Inc. (SCS), a manufacturer of office furniture, sales for the three months that ended May 24 dipped. While the decline was driven mostly by weakness in northern Europe, the Grand Rapids, Michigan-based company also reported fewer U.S. federal government orders.
“We experienced a modest decline within the U.S. federal government sector, which marks the eighth consecutive quarter of year-over-year declines,” Chief Financial Officer Dave Sylvester said on a June 20 earnings call.
To contact the reporter on this story: Lorraine Woellert in Washington lwoellert@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
