US durable goods orders reboundComment on this story
Demand for long-lasting US manufactured goods rebounded more than expected in May and a gauge of business spending plans increased, but slowing global growth suggest the momentum might not be sustained.
Slower growth in China and a looming recession in the debt-crisis ridden euro zone have taken some of the shine off the domestic manufacturing sector, leaving the economy mired in a soft patch.
Still, the report from the Commerce Department on Wednesday suggested the sector, which has shouldered the economy's recovery from the 2007-09 recession, was not falling apart.
Durable goods orders increased 1.1 percent after a revised 0.2 percent decrease the prior month. That was well above economists' forecasts for a 0.4 percent increase.
Durable goods range from toasters to aircraft and are meant to last more than three years.
“With global and domestic demand continuing to weaken we believe that this relatively brisk pace of new orders activity is unlikely to be sustained, and expect the pace of activity to be tepid in the coming months,” said Millan Mulraine, senior macro strategist at TD Securities in New York.
US stock index futures rose slightly on the report, while Treasury debt prices briefly fell. The dollar held gains against the euro and yen.
Orders were lifted by a 2.7 percent jump in transportation equipment as aircraft bookings picked up and motor vehicles demand increased, though at a slower pace than in the prior month.
Excluding transportation, orders rose 0.4 percent after dropping 0.6 percent in April. But May's strength, which came after two straight months of declines, could prove temporary.
Regional surveys of factory activity have mostly shown a weakening in orders this month, a trend that is likely to be highlighted in a report on national manufacturing next week.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.6 percent after dropping 1.4 percent in April. The gain snapped two straight months of declines.
Shipments of non-defense capital goods orders excluding aircraft, used to calculate equipment and software spending in the gross domestic product report, rose 0.4 percent after declining 1.5 percent in April.
Last month, orders for civilian aircraft rose 4.9 percent and motor vehicles climbed 0.5 percent.
Boeing received eight orders for aircraft, according to the plane maker's website, up from four in April.
Outside transportation, details of the report were fairly mixed, with orders for machinery, electrical equipment and appliances, and capital goods increasing. Demand for primary metals and computers fell. - Reuters