Durable Goods Orders Rise Sharply in May

Washington, DC, June 24, 2009--Durable goods orders rose sharply for a second straight month in May, and a key indicator of business investment surged by the largest amount in nearly five years.

The Commerce Department said Wednesday that demand for durable goods rose 1.8 percent last month, far better than the 0.6 percent decline that economists expected. It also matched the rise in April, with both months posting the best performance since December 2007, when the recession began.

Orders for non-defense capital goods, a key proxy for business investment plans, jumped 4.8 percent, the biggest increase since September 2004. That could signal that businesses have stopped trimming their investment spending.

The back-to-back monthly gains in orders for durable goods, or items expected to last at least three years, were further evidence that a dismal stretch for U.S. manufacturers may be nearing an end. Still, analysts say any sustained rebound is still months away.

American companies have been forced to trim millions of workers as they struggle with the longest U.S. recession since World War II. U.S. businesses also have faced a sharp drop in exports as many major overseas markets struggle with their own downturns.

Excluding transportation, orders for durable goods posted a 1.1 percent rise in May, also better than the 0.4 percent drop that had been expected.