Washington, DC, May 26--Demand for longer-lasting manufactured goods took its biggest tumble in a year and a half during April following big back-to-back increases.
Durable-goods orders declined 2.9% to $191.3 billion last month, the Commerce Department said Wednesday. Non-defense capital goods excluding aircraft--a barometer of business spending--fell 3.5%, after shooting up 6.0% in March.
The report showed March demand increased 5.7% as opposed to a previously reported 5.0% advance. February orders were unrevised at a 3.9% increase.
The projection for April durables was far weaker than expected on Wall Street. A Dow Jones-CNBC survey of 21 economists had forecast orders down 0.5%.
But estimates on durable goods are volatile and subject to revision; analysts caution against using monthly figures when trying to tell where the U.S. economy is heading.
The decrease in April was the largest since a 6.0% drop in September 2002, but it followed a pair of strong gains. Some analysts point to higher capital spending and inventory restocking, saying it benefits manufacturers. In a sign of strength of U.S. production, industrial output surged in April, the Federal Reserve said two weeks ago. Capacity use rose to its highest level in nearly three years.
The government's durable-goods report for April showed decreases in most categories.
Transportation orders declined by 4.7%. March orders rose 4.1%. Non-defense aircraft orders decreased 9.7% and defense aircraft demand dropped 5.8%. Cars and parts declined 3.2%. Excluding transportation when calculating demand for all durable goods, overall orders fell by 2.1%.
Capital goods orders fell by 3.7% after going up 3.8% the prior month. There was a 10.9% drop in demand for defense-related items. Excluding defense orders from calculations, overall durable-goods orders went down by 2.4%.
Orders sank by 2.7% for non-defense capital goods, which are meant to last at least 10 years and act as an indicator of business spending. Demand advanced 6.0% in March.
Orders for computers and electronic products decreased by 4.1% in April. Machinery orders fell by 4.9%. Demand for primary metals went down 5.3%. Fabricated metal products dropped 1.1%. Orders for electrical equipment and appliances advanced by 3.4%.
Durable-goods inventories went up by 0.5%, unfilled orders rose by 0.6%, and shipments decreased 0.8%.
