U.S. Durable Goods Rose n 2.9% in April, Beating Expectations

By Joyce Hanson

May 27, 2010 at 08:00 PM

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New orders for U.S. durable goods rose 2.9% in April largely due to a $7 billion increase in commercial aircraft, for the fourth increase in the last five months after a slight decrease in March, the Commerce Department reported Wednesday, May 26.

The report came in well above consensus expectations for a 1.3% increase. But without the transportation equipment boost of $7 billion, a 16.1% rise over March, the 1% decrease in other new orders disappointed expectations for a 0.5% increase.

"We are not much concerned by the drop in orders ex-transport; the February and March numbers were very robust and a correction was due," said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, New York, in an analyst note.

The underlying trend is still "strongly upwards," Shepherdson added, saying that he expects the rate of growth to slow in the second half as inventory-building slows and the stronger dollar takes its toll on exports.

Durable goods, which are big-ticket manufactured items that last at least three years, have proved to be a boon for the U.S. economy as it climbs out of recession. The 2.9% rise in April reflects a $5.6 billion increase in new orders for manufactured durable goods to $193.9 billion, according to the U.S. Census Bureau's report for the Commerce Department.

Shipments of U.S. durable goods in April, up two consecutive months, increased $2.7 billion to $196.0 billion, with computers and electronic products seeing the largest increase, at $2.5 billion, or 8.1%, to $33.4 billion. That increase followed two consecutive monthly declines.

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