Durable Goods Orders Slip In May
Durable Goods Meant To Last 3 Or More Years
Orders for long-lasting manufactured items dropped by 1% in May, with demand for military equipment falling sharply, according to the U.S. Commerce Department. Excluding defense-related goods, however, orders were up 0.6%, suggesting business spending is on the rise. Durable goods are items ranging from toasters to aircraft that are meant to last three or more years.
Non-defense capital goods orders excluding aircraft were up 0.7%, after a 1.1% decline in April, another positive economic sign. Known as core capital goods, this key category is closely watched as a proxy for business investment. Factories reported higher demand for steel and other metals, computers, and autos last month. Factory production rose at a steady pace in May, according to the Federal Reserve, with manufacturers producing more cars, machinery, furniture, computers and appliances, pointing to heightened consumer demand.
Auto sales hit a nine-year high in May, thanks to increased purchases of SUVs and pickup trucks, data shows. A survey by the Institute of Supply Management, a trade group of purchasing managers, found that manufacturing expanded faster in May than April. Manufacturers have been hiring to keep up with the demand, adding 10,000 factory positions last month. The average work week for manufacturing employees grew as well.
The boost in manufacturing activity comes after a sharp contraction of the U.S. economy in the first quarter, down 2.9% in the first three months of 2014, the worst annual rate since the depths of the Great Recession in 2009. The poor performance was tied to the snowy winter, and most economists expect economic growth this quarter, predicting a 3.5% expansion for April, May and June.