By Lindsay Dunsmuir
WASHINGTON New orders for key U.S.-made capital goods unexpectedly fell in May and shipments also declined, suggesting a loss of momentum in the manufacturing sector halfway through the second quarter.The Commerce Department said on Monday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2 percent, the largest decline since December. These so-called core capital goods orders were revised up to show an increase of 0.2 percent for April. They were previously reported to have risen 0.1 percent.Shipments of core capital goods fell 0.2 percent last month after rising 0.1 percent in April. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.
Economists polled by Reuters had forecast core capital goods orders rising 0.3 percent in May."We see the core data as consistent with soft business investment in the second quarter" said Blerina Uruci, an economist with Barclays.
U.S. Treasury yields fell and the dollar .DXY was trading lower against a basket of currencies after the release of the data. U.S. stocks shrugged off the report to open higher as technology shares rallied and oil prices climbed from last week's seven-month lows.The report added to growing worries that an acceleration in economic growth in the second quarter may not be as robust as expected. Recent data on retail sales, manufacturing production and inflation have given pause and housing data has been mixed.
The weakness comes despite a continuing strong job market. The unemployment rate fell to a 16-year low of 4.3 percent in May.Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or longer, fell 1.1 percent in May, the biggest decline since November. They dropped 0.9 percent in April.Last month, orders for machinery rose 0.6 percent while shipments decreased 0.3 percent. Civilian aircraft orders declined 11.7 percent and bookings for defense aircraft and parts plummeted 30.8 percent. Orders for motor vehicles and parts increased 1.2 percent. (Reporting by Lindsay Dunsmuir; Editing by Paul Simao)
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Updated Date: Jun 26, 2017 22:09:46 IST