U.S. durable goods orders rise on defense, but business spending plans weak

WASHINGTON Tue May 27, 2014 9:10am EDT

Shoppers look at appliances at a Home Depot store in New York in this file image from December 23, 2009.  REUTERS/Lucas Jackson/Files

Shoppers look at appliances at a Home Depot store in New York in this file image from December 23, 2009.

Credit: Reuters/Lucas Jackson/Files

WASHINGTON (Reuters) - Orders for long-lasting U.S. manufactured goods unexpectedly rose in April, but a drop in a measure of business capital spending plans could temper expectations for a sharp rebound in economic growth this quarter.

The Commerce Department said on Tuesday durable goods orders increased 0.8 percent as demand for defense capital goods surged and orders for fabricated metal products, transportation equipment and electrical equipment, appliances and components rose.

Durable goods range from toasters to aircraft and are meant to last three years or more. Orders advanced by a revised 3.6 percent in March. Economists polled by Reuters had forecast durable goods orders falling 0.5 percent last month after a previously reported 2.5 percent rise in March.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 1.2 percent after rising by a revised 4.7 percent in March, which was the largest gain since November.

Economists had expected orders for these so-called core capital goods to rise 0.2 percent last month after a previously reported 2.9 percent jump in March.

The report could cause economists to dial down expectations for a sharp rise in growth in the second quarter after the economy sputtered in the first three months of the year.

Core capital goods shipments fell 0.4 percent last month. Shipments of core capital goods are used to calculate equipment spending in the government's GDP measurement. They had increased 2.1 percent in March.

Orders for defense capital goods jumped 39.3 percent, the largest rise since December 2012. Transportation equipment rose 2.3 percent, even as bookings for civilian aircraft and automobiles fell.

Orders excluding transportation edged up 0.1 percent after increasing 2.9 percent the prior month.

There were declines in orders for machinery, primary metals and computers and electronic products.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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