Washington, DC, June 25--Durable-goods orders unexpectedly fell in May, led by lower capital goods, electrical equipment and transportation orders, suggesting the manufacturing sector's recovery remains fragile.
Orders for durable goods, or items meant to last three years or longer, fell 0.3% to $168.33 billion last month, the Commerce Department said Wednesday. This follows a revised 2.4% drop in April orders.
Economists had expected orders to rise 1% for the month, according to a survey by Dow Jones Newswires and CNBC.
Reports on durable goods are highly volatile and analysts caution against using the monthly figures as a good indication of which direction the economy is heading.
The decline in orders was fairly broad-based with declines in all categories except computers and electronic products, which rose 1.2%, and fabricated metal products, which were up 2.5%.
Transportation orders fell 1.6%, led by a hefty drop in orders for defense aircraft and parts. Within that category, cars and parts orders slid 0.1% and civilian aircraft orders fell 0.7%. If transportation orders were excluded, durable-goods orders would have risen 0.2% for the month.
Defense capital-goods orders plummeted 13.8%. If defense orders were excluded, durable-goods orders would have risen by 0.3%.
Capital goods orders fell 2.7%.
The report suggests that businesses remain reluctant to spend. Orders for nondefense capital goods--which are items meant to last 10 years or more--fell by 0.5% if orders for aircraft are excluded.
Durable-goods inventories fell by 0.2% for the month. Unfilled orders fell by 0.1% while durable-goods shipments fell by 0.3% in May.
