By Alex Kowalski - May 24, 2013 Orders for U.S. durable goods increased more than forecast in April, indicating the world’s largest economy will get a lift in the second half of the year as business investment strengthens. Bookings for equipment meant to last at least three years increased 3.3 percent last month after dropping 5.9 percent in March, the Commerce Department said today in Washington. The median forecast from 78 economists surveyed by Bloomberg projected a 1.5 percent increase.
Gains in residential construction, growing demand for autos and the need to update equipment will probably ripple throughout manufacturing, helping the economy recover from a slowdown this quarter. At the same time, government cutbacks and cooling exports are restraining demand, which means the rebound will be slow to develop.
“This report is consistent with the economy continuing to recover, but just at a moderate pace,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, and the second-best forecaster of capital goods orders over the past two years, according to data compiled by Bloomberg. “We’re not getting much demand from the rest of the world, but we are getting growth domestically.”
Stocks dropped on concern an improving economy will prompt Federal Reserve policy makers to reduce record stimulus before the year is out. The Standard & Poor’s 500 Index fell 0.4 percent to 1,643.38 at 11:15 a.m. in New York.
Globally, German business confidence improved in May for the first time in three months, adding to signs Europe’s largest economy is picking up.
Survey Results
Estimates for April durable goods in the Bloomberg survey of economists ranged from a drop of 5.9 percent to a gain of 4.6 percent. The Commerce Department revised the March decline from a previously reported 6.9 percent drop.
The gain in bookings last month was boosted by a rebound in demand for commercial aircraft, which is often volatile. Aircraft orders climbed 18.1 percent in April after slumping 43 percent the prior month. Boeing Co. (BA), the Chicago-based aerospace company, said it received orders for 51 planes last month, up from 29 in March.
Excluding the transportation equipment component, orders climbed 1.3 percent, the first gain in three months.
Bookings for non-defense capital goods excluding aircraft, considered a proxy for future business investment in items such as computers, engines and communications gear, increased 1.2 percent after a 0.9 percent gain the prior month that was previously reported as a drop.
Growth Outlook
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