New Orders for Durable Goods Increase in April

New orders for manufactured durable goods in April increased $5.6 billion or 2.9 percent to $193.9 billion, according to the U.S. Census Bureau. This was the fourth increase in the last five months and followed a slight March decrease. Excluding transportation, new orders decreased 1.0 percent. Excluding defense, new orders increased 3.4 percent.

Transportation equipment, up following two consecutive monthly decreases, had the largest increase, $7.0 billion or 16.1 percent to $50.7 billion. This was due to nondefense aircraft and parts which increased $7.3 billion.

"Despite the 2.9 percent overall increase, the disappointing report on durable goods demand for April testifies to the still tenuous nature of the U.S. economic and manufacturing recovery," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI. "Though new orders rose by nearly 3 percent, after essentially flat growth in the previous two months, orders fell by 1 percent after stripping out the volatile transportation component, which was supported by a nearly 230 percent increase in demand for nondefense aircraft and parts.

"Activity appears to have slowed in key parts of the manufacturing supply chain as evidenced by a nearly 6 percent drop in machinery demand and a 2 percent decline in orders for primary metals, albeit following strong activity in previous months in both industry sectors," Waldman said.

Shipments
Shipments of manufactured durable goods in April, up two consecutive months, increased $2.7 billion or 1.4 percent to $196.0 billion. This followed a 2.1 percent March increase.

Computers and electronic products, up following two consecutive monthly decreases, had the largest increase, $2.5 billion or 8.1 percent to $33.4 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in April, up three of the last four months, increased $3.5 billion or 0.4 percent to $801.3 billion. This followed a 0.1 percent March decrease.

Transportation equipment, also up three of the last four months, had the largest increase, $2.3 billion or 0.5 percent to $480.2 billion.

Inventories
Inventories of manufactured durable goods in April, up four consecutive months, increased $1.9 billion or 0.7 percent to $301.4 billion. This followed a 0.6 percent March increase.

Primary metals, up six consecutive months, had the largest increase, $1.2 billion or 4.2 percent to $29.9 billion.

Capital Goods
Nondefense new orders for capital goods in April increased $5.5 billion or 9.2 percent to $66.1 billion. Shipments increased $0.1 billion or 0.2 percent to $62.4 billion. Unfilled orders increased $3.7 billion or 0.8 percent to $483.7 billion. Inventories increased $1.2 billion or 0.9 percent to $125.3 billion.

Defense new orders for capital goods in April decreased $0.2 billion or 2.1 percent to $10.7 billion. Shipments decreased $0.4 billion or 3.8 percent to $10.6 billion. Unfilled orders increased $0.1 billion or 0.1 percent to $139.6 billion. Inventories decreased $0.3 billion or 1.6 percent to $17.9 billion.

"The uneven revival in capital spending, a critical issue for U.S. factory sector prospects, has been largely generated by a surge in orders for computers and information processing equipment at growth rates which are unsustainable," Waldman said. "Looking ahead, the risks to the uneven global economic recovery brought about by the turmoil in the Eurozone is not good news as the U.S. manufacturing recovery struggles to transition from one that is powered by inventory restocking and fiscal stimulus to growth that is supported by sustainable domestic and global economic activity."

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