New orders for big-ticket items decline

Census Bureau says spending on manufactured durable goods fell 0.5% in April.

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By Catherine Clifford, staff writer

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NEW YORK ( -- New orders for manufactured big-ticket items decreased in April, according to a government report issued Wednesday, but the decline was not nearly as severe as economists expected.

The U.S. Census Bureau said that new orders for durable goods fell 0.5% to $214.4 billion. This was the third decrease in four months and followed a revised 0.3% decrease in March.

Economists surveyed by expected a 1.5% decline in big-ticket new orders.

"While not big-time expansionary, it is not recessionary either," said Tim Quinlan, economist at Wachovia Economics Group.

Excluding transportation, new orders increased 2.5%. Excluding defense, new orders decreased 0.3%.

Nondefense new orders for capital goods in April decreased 1.4% to $74.4 billion. Defense new orders for capital goods, on the other hand, increased by 4.8% to $8.8 billion.

With consumer spending slowing down, the health of the economy is increasingly dependent on businesses pumping dollars into the sagging U.S. economy.

"The consumer is certainly the lion's share of GDP," said Quinlan. "But at the margin, business spending becomes very important."

Considering big ticket spending while excluding both volatile aircraft and war spending provides a good proxy for general business spending. New orders for capital expenditures that are not defense-related or aircraft increased by 4.2%.

"You got a lot of noise in the headline number from transportation," said Quinlan. "So when you exclude that, it will give you a sense of how American manufacturing is doing in general."

Shipments of manufactured durable goods in April increased 1.2% to $212.2 billion, following two consecutive monthly decreases. This followed a 0.9% decrease in March.

The weak dollar has supported exports. Products made in the United States and sold in dollars seem cheaper to other countries because of the low valuation of the greenback, said Quinlan.

Unfilled orders for manufactured durable goods have been up 26 of the last 27 months, and increased 1% to $804.5 billion in April.

Inventories of manufactured durable goods, up nine of the last ten months, also increased in April by 0.5% to $328.6 billion.

While economists see a benefit in an increase in unfilled orders, which indicate that there is work in the pipeline to keep factories and workers busy, they believe it would be better for the economy for inventory levels to be low.

"Your stockpiles are building, so at some point you may have to cut production to cut down inventory stockpiles," said Quinlan.  To top of page

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