U.S. Durable Goods Orders Jump In April As Aircraft Demand Soars

(RTTNews) - Partly reflecting a jump in orders for commercial aircraft and parts, the Commerce Department released a report on Thursday showing that new orders for U.S. manufactured goods surged up by much more than expected in April.

The Commerce Department said durable goods orders shot up by 3.4 percent in April after climbing by an upwardly revised 1.9 percent in March.

Economists had expected orders to rise by just 0.3 percent compared to the 0.8 percent increase that had been reported for the previous month.

The much bigger than expected increase in durable goods orders was principally due to the sharp jump in orders for commercial aircraft and parts, which soared by 64.9 percent.

However, analysts noted the commercial aircraft component is notoriously volatile and not indicative of underlying strength.

Excluding orders for transportation equipment, durable goods orders rose by a much more modest 0.4 percent in April after inching up by 0.1 percent in March. The increase matched economist estimates.

A 3.1 percent jump in orders for fabricated metal products contributed to the uptick in ex-transportation orders along with a 1.9 percent increase in orders for computers and electronic products, although orders for machinery slumped by 1.9 percent.

The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of capital spending, fell by 0.8 percent in April after edging down by 0.1 percent in March.

Shipments in the same category rose by 0.3 percent in April after falling by 0.3 percent in March, although the three month annualized rate still came in at negative 10.6 percent.

Despite the strength indicated by the headline figure, ING Chief International Economist Rob Carnell said the core capital goods shipments and orders data show no conclusive improvement from weak levels.

"As far as the June Fed decision goes, this data has not taken the argument very far forward," Carnell said. "We remain slightly in favor of a July hike, but the outcome remains data dependent."

Next Friday, the Commerce Department is scheduled to release a separate report on April factory orders, which include orders for both durable and non-durable goods.