INSTANT VIEW: durable goods orders fell in April

NEW YORK (Reuters) - New orders for long-lasting U.S. manufactured goods fell a smaller-than-expected 0.5 percent in April as transportation orders dipped, but a key barometer of business confidence posted a surprisingly sharp gain, government data released on Wednesday showed.

KEY POINTS: * Analysts polled by Reuters were expecting durable goods orders to drop 1.0 percent as the weak U.S. economy impacts construction and motor vehicle industries. * Stripping out transportation, orders rose 2.5 percent, the biggest gain since July, the Commerce Department said. Analysts were expecting a 0.5 percent decrease. * Transportation orders were off 8 percent as civilian aircraft orders tumbled 24.4 percent.

COMMENTS:

MICHAEL DARDA, CHIEF ECONOMIST, MKM PARTNERS LLC, GREENWICH,

CONNECTICUT:

"(It's) better than expected, particularly in nondefense capital goods ... The way to look at this number is on a year to year basis because it jumps around monthly, we're up 2.4 percent year on year for non-defense capital goods and last month was up just up one-tenth of a percentage point. So it actually looks like business investments slowed down late last year and are accelerating modestly, We were down 6 percent or so year on year in the fall and winter.

"If you look at unfilled orders, up 1.6 percent month on month and up 8.6 percent year on year, the capital goods sector continues looks like a bright spot.

"The durable goods data fits into the perception that the economy is not as weak as has been widely feared.

"I think the positive data doesn't the suggest that economy is falling the off the cliff, just the contrary. There is a depression in consumer sentiment but it is not being reflected in the tone and tenor of the macroeconomic data."

JOSH STILES, BOND STRATEGIST, IDEAGLOBAL, NEW YORK:

The durable goods report "is a good excuse for dealers to mark down 2-year and 5-year Treasuries ahead of the auctions. The durables number was better than expected. That, combined with the ongoing inflation concerns is seeing the 10-year note test its key 4 percent area. Over the coming week it will probably push up above that and break 4.15 percent because of inflation and because data hasn't been as weak as expected recently."

T.J. MARTA, FIXED INCOME STRATEGIST, RBC CAPITAL MARKETS, NEW

YORK:

"You strip out defense and aircraft and you had a 4.2 percent pop. It really becomes hard to suggest that we have got a full fledged recession here. We had the chain store sales out earlier this morning up 1.5 percent year on year, not stellar but not recessionary either. Consumers are being weighed by the high food and energy prices, but you have a weak dollar and orders are good. It is a situation of one foot in boiling water and one foot in ice water, and overall you are not going to come out that badly."

SHAUN OSBORNE, SENIOR CURRENCY STRATEGIST, TD SECURITIES,

TORONTO: