April durable goods orders edge up as machinery drags

WASHINGTON (Reuters) - Demand for long-lasting manufactured goods rose less than expected in April as companies scaled back plans to add machinery and the military ordered fewer aircraft, suggesting factory activity was losing momentum in the second quarter.

New orders for durable goods edged 0.2 percent higher last month, a minimal gain after a revised 3.7 percent drop in March, the Commerce Department said on Thursday.

Economists had forecast orders for durable goods, which range from toasters to aircraft, to increase 0.5 percent in April after a previously reported 3.9 percent fall in March.

Orders were dragged down by a 2.8 percent decline in machinery and 34 percent fall in military aircraft. New orders of computers and electronic products fell 0.6 percent.

Excluding transportation, orders fell 0.6 percent. Economists had forecast this category to rise 0.9 percent.

Manufacturing has been one of the main sources of economic growth, but it could be slowing as euro zone economies slide into recession and China's economy cools.

Civilian transportation orders were a bright spot in the report. New orders for motor vehicles rose 5.6 percent, while non-defense aircraft rose 7.2 percent despite Boeing reporting on its website that it received only four orders for aircraft last month.

Adding to the report's weak tenor, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 1.9 percent in April after a revised 2.2 percent drop the prior month.

Economists had expected this category to rise 0.7 percent after a previously reported 3.6 percent increase.

Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, dropped 1.4 percent after increasing 1.9 percent in March.

(Reporting by Jason Lange; Editing by Neil Stempleman)