|
Durable goods orders drop
|
 |
May 26, 1999: 1:13 p.m. ET
Slow transportation orders lead to 2.3% overall dip in April, surprising analysts
|
NEW YORK (CNNfn) - A sharp drop in demand for transportation equipment reduced U.S. durable goods orders by a surprising 2.3 percent during April, a sharp reversal from the 2.7 percent increase posted the month before, the Commerce Department reported Wednesday.
Analysts surveyed by Reuters had been expecting a gain of 0.3 percent during April. The March percentage increase was revised down from the originally reported 2.9 percent.
Total orders of U.S. manufactured goods fell to a seasonally adjusted $194.38 billion during April, down from the revised $198.93 billion figure posted during March.
Manufacturing remains strong
Still, orders excluding transportation products rose 0.9 percent after climbing 2.0 percent during March, providing analysts with yet another indication that the manufacturing sector is slowly righting itself amidst improved economic conditions overseas.
Earlier this month, the National Association of Purchasing Management announced its index measuring new orders in the manufacturing sector grew for the third consecutive month during April, while the Federal Reserve reported manufacturing output hit a six-month high during the same period.
Analysts believe Wednesday's durable goods report is not only strong enough to reinforce the industry's improved fortunes, but also weak enough -- because of the overall reduction -- to stave off a Federal Reserve rise in interest rates, for now.
"It certainly takes the edge off the possibility of them doing something soon," Rosanne Cahn, chief equity economist with Credit Suisse First Boston, told CNNfn. "There is no reason to raise U.S. interest rates without an inflation problem and risk some of the customers for some of the overseas economies. They need us to buy their goods."
U.S. markets seemed to agree. After a choppy morning, U.S. stocks traded higher by midday while the benchmark 30-year Treasury bond remained down 13/32 of a point in price as the yield edged up to 5.74 percent.
Aircraft orders to blame
Overall, orders of costly transportation goods, which account for more than one-fifth of the total monthly orders, tumbled 12.4 percent after posting a 4.7 percent gain during March.
Although specific industry figures won't be released for another week, a Commerce Department spokesman said a sharp decline in aircraft and aircraft part orders accounted for roughly half the $5.9 billion decrease in transportation goods orders from March to April.
The other three transportation sectors -- motor vehicles and motor vehicle parts, shipbuilding, and railroad and other equipment -- all declined as well, but not as significantly, the spokesman said.
As for durable goods, industrial machinery and equipment orders showed a strong increase, climbing 1.3 percent following a 0.6 percent decrease during March, while primary metal orders inched up 0.2 percent.
Excluding defense-related items, durable goods orders fell by only 0.1 percent to $189.44 billion.
Total durable goods shipments, excluding a $1.2 billion decline in transportation equipment, were flat, but remain 5 percent above last year's pace through April. 
|
|
|
|
|
|
Commerce Department
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
