Demand for airplanes, machinery, computers boost May orders by 1.8% WASHINGTON (MarketWatch) - Better orders for airplanes and machinery translated into a better-than-expected 1.8% increase in durable goods orders in May, the Commerce Department estimated Wednesday. A narrower gauge of business investment marked its largest improvement in more than four years. It was the third increase in the past four months for durable-goods orders. Despite the recent increases, however, the level of new orders in May was down 5.1% from December. Orders are down 26.8% in the first five months of the year compared with the same period a year ago. The 1.8% increase followed an identical gain in April. Economists surveyed by MarketWatch were forecasting a 0.5% decline, banking on weakness in the auto sector to prevail over modest improvements in other industries. Most sectors reported better bookings in May compared with April. Civilian aircraft orders soared 68%, machinery orders rose 7.7%, and computer orders jumped 9.8%. Declining orders were seen in fabricated metals, motor vehicles and electrical equipment. The monthly durable goods report is hugely volatile, in large part because of swings in demand for civilian aircraft and other extremely expensive items. Excluding the 3.6% rise in transportation equipment orders, durable orders rose 1.1% in May. Excluding the 68% rise in aircraft, orders rose 0.1%. The report indicates that the severe decline in manufacturing output in the first quarter moderated, as businesses and consumers regained some appetite for big-ticket items such as airplanes and refrigerators. The new orders component of the Institute for Supply Management index rose into positive territory in May for the first time in more than a year. However, industrial production declined 1.1% in May and manufacturing output fell 1%. Details Shipments of durable goods fell 2.1% in May and are down 19.3% in the first five months of the year compared with a year earlier. Inventories of durable goods fell 0.8%. Orders for nondefense capital equipment goods excluding aircraft rose 4.8% in May after a 2.9% decline in April. It was the largest increase since September 2004. Such core capital goods orders are considered the best gauge of capital spending by businesses. Core capital goods orders are down 24% from the first five months of 2008. Shipments of core capital goods - a figure that feeds directly into gross domestic product calculations - rose 0.3% in May. Orders for transportation goods rose 3.6% in May. Orders for vehicles and parts fell 8.1%. Orders for electronics (excluding semiconductors) rose 2.2% in May. Orders for machinery rose 7.7%. Orders for fabricated metals fell 2.5%. Orders for primary metals rose 0.2%. Orders for electrical equipment fell 1.1%. Orders for defense capital goods rose 7.4%. Excluding defense, orders rose 1.4%.

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