With orders for transportation equipment pulling back sharply, the Commerce Department released a report on Friday showing a bigger than expected decrease in new orders for U.S. manufactured durable goods in the month of April.
The Commerce Department said durable goods orders slumped by 1.7 percent in April after spiking by an upwardly revised 2.7 percent in March.
Economists had expected orders to drop by 1.4 percent compared to the 2.6 percent jump that had been reported for the previous month.
The bigger than expected decrease in durable goods orders came as orders for transportation equipment plunged by 6.1 percent in April after surging up by 6.9 percent in March.
Orders for non-defense aircraft and parts led the way lower, plummeting by 29.0 percent in April after soaring by 60.7 percent in March.
Excluding the pullback in orders for transportation equipment, durable goods orders climbed by 0.9 percent in April after rising by 0.4 percent in March. Ex-transportation orders had been expected to increase by 0.5 percent.
Orders for electrical equipment, appliances, and components shot up by 2.6 percent, while orders for fabricated metal products, primary metals, and computers and electronic products also saw notable growth.
The report also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, increased by 1.0 percent in April after sliding by 0.9 percent in March.
“Looking ahead, some of the capex intentions surveys have softened in recent months, although the early regional manufacturing surveys for May showed a more encouraging rise in new orders,” said Andrew Hunter, U.S. Economist at Capital Economics.
He added, “With industrial capacity utilization at a three-year high and firms still benefiting from the recent tax cuts, business equipment investment should expand at a solid pace over the coming quarters.”
The Commerce Department said shipments of durable goods edged down by 0.1 percent in April after climbing by 0.7 percent in March.