WASHINGTON (MarketWatch) — Orders for durable or long-lasting goods made in the U.S. jumped 3.4% in April because of a surge in bookings for commercial jets that won’t be built for years. But a key measure of business investment fell again.
The increase in new orders last month was powered by a spike in demand for commercial planes, the Commerce Department said Thursday. Those orders accounted for 85% of the increase in April bookings. Typically large planes are built or delivered five years after they are ordered.
Orders for new autos and parts also rose nearly 3%, snapping back from a decline in the prior month.
Stripping out transportation, durable-goods orders increased a modest 0.4% in April after a meager 0.1% advance in March. Bookings for heavy machinery fell and orders for primary metals used in a wide variety of goods were flat.
In April, orders for a category known as core capital goods that’s viewed as a proxy for business investment declined 0.8%. They’ve fallen in five of the past six months.
Companies have been reluctant to invest more heavily because of a tepid global economy and falling exports, among other things. Some economists also think an increasingly contentious U.S. presidential election tinged by anti-business rhetoric is hurting investment.
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“The outlook for durable goods looks like even more months of drifting nowhere,” said Michael Montgomery, U.S. economist at IHS Global Insight.
Core orders are 4.1% lower through the first four months of the year compared with the same period in 2015. Business spending is one of the third main pegs holding up the economy and persistent weakness means the U.S. cannot grow as its fastest potential speed.
Shipments of core capital goods, a category used to help determine quarterly economic growth, edged up 0.3%.
The increase in durable-goods orders in March, meanwhile, was revised to 1.9% from 1.3%.
