Core durable goods orders indicate strength in business investment
By Hao Li | June 25, 2010 3:39 AM EST
Data in the Census Bureau's durable goods orders report this morning point to continued strength in business spending.
New orders for manufactured durable goods in May fell by by $2.2 billion, or 1.1 percent, to $192.0 billion. Excluding transportation, new orders increased 0.9 percent and excluding defense, it dropped 1.1 percent.
Economists surveyed by Bloomberg expected overall orders to decline 1.4 percent and orders excluding transportation to gain 1 percent.
Orders for capital goods, excluding both defense and aircraft – sectors where the orders tend to be in bulk and thus volatile – increased by 2.1 percent to $59.6 billion.
New orders for machinery – which includes goods like farming and construction equipment – increased 5.6 percent while orders for computers and electronic products decreased 2.6 percent.
Paul Ashworth, senior U.S. economist at Capital Economics, said in a research note that one should not pay too much attention to the headline number which dropped 1.1 percent due to the “notoriously volatile commercial aircraft component.”
Ashworth is encouraged by the 0.9 percent increase excluding transportation after the figure decreased in April, which suggests that “Europe's woes and recent financial market turbulence haven't dampened the new-found enthusiasm firms have for investing in new capital equipment.”
Prior to April's 1.0 percent drop, orders excluding transportation had increased 2.8 percent in March and 0.9 percent in February.
However, Ashworth cautioned that business investment alone will not be sufficient to support a strong overall recovery; a greater pickup in consumer spending is needed to sustain the economic growth.
To contact the editor, e-mail:
Most Popular Slideshows
Join the Conversation
- The Pirate Bay Blockade: Cost Of Blocking Websites Like TPB Is Ridiculously High
- Vatican 2014 Final Synod Report: Gays Still ‘Unwelcome’ in Catholic Church, LGBT Thankful for First Step
- New Zealand Losing $9.4 Billion Every Year to Fraud
- 5 Cities With The Highest Cost Of Living In 2014
- Family Of Ebola Nurse Patient Hires Lawyer To Clear Things Up, Refutes CDC Claims; Agency Revises Guidelines
- iOS 8 Jailbreak Release Date Likely this October 2014 with Pangu not Evad3rs Firming Up as Creator
- Chilling: New ISIS Video Addresses Australia; Aussie Teen Delivers Message
- Top 4 Free-To-Download Apps for Fuller iPhone 6, 6 Plus Experience
- Battery Saving Android 5.0 Lollipop Feature Extends The Battery Life Of Your Android Device By 90 Minutes And Displays Orange Bar While Power Saving Mode Is On
- Apple Inc. (AAPL) Stock Set to Soar Beyond $100 Despite Decline After New iPad Launch
- Russia Beefs Up Gold Reserves To Offset Heat of Sanctions And Undercut Dollar
- Xiaomi Mi4 And MiPad Prices Likely Slashed, Thanks To Rivals Oppo, OnePlus And Meizu