NEW YORK (CNN/Money) -
April orders for long-lasting goods made in the United States posted the largest drop in 20 months, the government reported Wednesday, coming in well below economists' forecasts.
Durable goods orders sank 2.9 percent to $191.3 billion last month after coming in at a revised increase of 5.7 percent in March, the Commerce Department reported. Economists had expected a drop of 0.8 percent, according to Briefing.com.
Excluding transportation, new orders fell 2.1 percent, and excluding defense, new orders dropped 2.4 percent, indicating a broad-based decline in orders from the manufacturing sector.
Following the report, U.S. Treasurys moved higher, while stock prices were mixed.
In a separate report, the Commerce Department said new home sales plunged 11.8 percent in April to a seasonally adjusted annual rate of 1.09 million units, compared with a record high rate of about 1.24 million units in March.
April's decline in durable goods orders followed a big gain in March and a 3.9 percent jump in February. Considering that and the notoriously volatile nature of this series, few economists were alarmed by the decline.
"Look for orders to rebound in May, reflecting broad-based recovery within the manufacturing sector," Edward Yardeni, chief investment strategist at Prudential Financial, said in a note to clients.
Orders for non-defense capital goods excluding aircraft, considered a proxy for business investment, fell 3.5 percent in April. But that followed gains of 6.0 percent and 2.3 percent in March and February, respectively.