U.S. Durable-Goods Orders Fell 1.1% in May
June 26 2017 - 9:00AM
Dow Jones News
By Ben Leubsdorf and Sarah Chaney
WASHINGTON--Demand for long-lasting factory goods declined in
May for the second straight month, a possible sign of softness in
the U.S. manufacturing sector.
Orders for durable goods--products designed to last at least
three years, such as computers and industrial robots--decreased
1.1% from April to a seasonally adjusted $228.18 billion in May,
the Commerce Department said Monday. That was the largest drop in
six months.
Economists surveyed by The Wall Street Journal had expected a
more modest 0.4% decline last month. April orders were revised down
to a 0.9% decline, which followed four straight monthly rises.
Last month's fall was led by sharp declines in two volatile
categories, a 30.8% drop in military-aircraft orders and a 11.7%
drop in orders for civilian airplanes and parts.
Excluding the transportation segment, orders rose 0.1% in May.
Excluding defense products, orders were down 0.6% from April.
More broadly, factory demand has strengthened in 2017.
Durable-goods orders rose 2.8% in the first five months of 2017
compared with a year earlier.
A closely watched proxy for business investment in new
equipment, orders for nondefense capital goods excluding aircraft,
fell 0.2% in May from the prior month but was up 2.3%
year-to-date.
The U.S. manufacturing sector gained traction over the past year
after a weak stretch in 2015 and into 2016. Falling oil prices
pressured the domestic energy industry, while a strong dollar and
global weakness weighed on foreign demand for U.S. exports.
Now, the global economy has picked up, boosting international
trade flows. World oil prices stabilized, though they've moved
lower in recent weeks. The dollar's value jumped after last year's
presidential election, but has moved lower this year.
Total U.S. industrial production rose 2.2% in May from a year
earlier, including 1.4% growth for manufacturing output, according
to Federal Reserve data. A private-sector gauge of U.S.
manufacturing activity, produced by the Institute for Supply
Management, showed expansion in May for the ninth consecutive
month.
Companies' capital expenditures have rebounded, too. A broad
measure of U.S. business spending on equipment such as computers
and machinery, fixed nonresidential investment in equipment, rose
in the first quarter of 2017 and the fourth quarter of 2016
following four consecutive quarterly declines.
"Business investment, which was weak for much of last year, has
continued to expand," Federal Reserve Chairwoman Janet Yellen told
reporters this month. "And exports have shown greater strength this
year, in part reflecting a pickup in global growth."
The Commerce Department's durable-goods report can be accessed
at: https://www.census.gov/manufacturing/m3/index.html
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com and Sarah Chaney
at sarah.chaney@wsj.com
(END) Dow Jones Newswires
June 26, 2017 08:45 ET (12:45 GMT)
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