Orders for U.S. durable goods increase more than forecast

Growth Outlook

The figures used to calculate gross domestic product this quarter were less positive, indicating business investment is cooling. Shipments of non-defense capital goods excluding aircraft dropped 1.5% after increasing 0.5%.

Gains in inventories may help offset some of the softness in capital spending this quarter, limiting the damage to growth. Stockpiles climbed 0.4% in April after falling 0.1% the prior month, according to the report.

A pickup in manufacturing would stem a recent slowdown in inventory building that has curbed activity. The Institute for Supply Management’s manufacturing index declined in March and April, falling to just above the 50 level that represents the dividing line between contraction and expansion.

The U.S. economy probably cooled in the second quarter, giving businesses a reason to reduce the amount of stockpiles they hold, according to economists surveyed by Bloomberg. The federal government has also slashed outlays under sequestration, and American earners are facing increased payroll taxes.

Second Half

In the second half of 2013, a faster expansion will probably give companies reason to spend more, supporting producers. Home construction is picking up, and automakers are boosting output.

“We see indicators which point towards strengthening economies,” Louis Chenevert, chief executive officer of United Technologies Corp., said during an industry conference on May 21. Orders in the first quarter signal a rebound in the second half of the year, he said.

Chenevert said housing starts in the U.S. could increase 25% in 2013, European demand has shown signs of picking up and emerging markets have “good momentum.” Hartford, Connecticut-based United Technologies makes Carrier air conditioners, Pratt & Whitney jet engines and Otis elevators.

www.bloomberg.com

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