WASHINGTON—A pullback in military spending dragged down overall orders for big-ticket items from U.S. factories in May, but underlying readings showed business spending picking up from its winter slump.
Demand for durable goods—products such as cars and refrigerators that are designed to last at least three years—declined a seasonally adjusted 1.0% from April, the Commerce Department said Wednesday. It was the first decline in four months. Economists surveyed by The Wall Street Journal forecast orders would remain flat compared with April's level.
But outside the volatile transportation segment, demand for long-lasting goods declined a modest 0.1%. Swings in the civilian- and defense-aircraft categories can cause choppiness in the overall figure. And excluding defense, durable goods orders rose 0.6%.
"In short, the orders details were not as weak as the headline figure," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.
A U.S. Navy order of 10 new submarines for $17.6 billion likely caused April's defense capital-goods orders to surge 38.2%. In May, the category was down 31.4%.
New orders for motor vehicles and parts, and stronger business spending largely drove the underlying gains in durable-goods orders.
U.S. durable goods orders drop 1.0%, driven by pullback in military spending
June 25, 2014 by Leave a Comment