Orders for U.S. durable goods increased more than forecast in April, pointing to gains in business investment that will help manufacturing rebound in the second half of the year.
Bookings for equipment meant to last at least three years increased 3.3% last month after dropping 5.9% in March, the Commerce Department said today in Washington. The median forecast from 78 economists surveyed by Bloomberg projected a 1.5% increase.
Quickening activity in the housing and auto industries may ripple throughout manufacturing, rendering the economy better able to recover from a slowdown this quarter. At the same time, government cutbacks, higher taxes on consumers and cooling exports are crimping demand, which means any acceleration will be slow to develop.
“In the near term, manufacturing is entering a soft patch, but by the second half of the year, we should see some of that softness fade, whether it’s because global growth is picking up, construction drives machinery sales or autos do well,” Joshua Dennerlein, an economist at Bank of America Corp. in New York, said before the report. “This could quash some fears about a manufacturing slowdown.”
Stock-index futures trimmed earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in June fell 0.3% to 1,644.7 at 8:33 a.m. in New York. The gauge had been down as much as 0.7%.
Estimates in the Bloomberg survey of economists ranged from a drop of 5.9% to a gain of 4.6%. The Commerce Department revised the March decline from a previously reported 6.9% drop.
Bookings for commercial aircraft climbed 18.1% last month after slumping 43% in March, today’s report showed. Boeing Co., the Chicago-based aerospace company, said it received 51 orders last month, up from 29 in March.
Excluding the more volatile transportation equipment component, durable orders climbed 1.3%, the first gain in three months.
Bookings for non-defense capital goods excluding aircraft, considered a proxy for business investment in items such as computers, engines and communications gear, increased 1.2% after a 0.9% gain the prior month that was previously reported as a drop.