US durable goods orders fall by less than expected in April

Durable goods orders fell by less than was expected in April but the underlying data pointed to weak investment.

Durable goods orders fell by less than was expected in April but the underlying data pointed to weak investment.

Orders for goods made to last more than three years decreased by 0.7% month-on-month in April to reach $231.2bn, according to the Department of Commerce.

Economists had penciled in a drop of 1.8%.

In comparison to a year ago, total orders rose by 2.2%.

Significantly, March's reading was revised up to show an increase of 2.3% versus a preliminary estimate of 0.9%. Nonetheless, those revisions were on account of a sharp upwards revision to volatile data for aircraft orders in March, Blerina Uruci at Barclays Research explained.

Computers and electronic products was one the best performing categories, with orders rising by 1.4% on the month, while those for fabricated metal products and machinery shrank by 0.9% and 0.8%, respectively.

Excluding orders for transportation goods, which fell by 1.2% versus March, orders declined by 0.4% to $152.7bn (consensus: 0.4%).

So-called 'core' capital goods orders, which exclude the volatile defence and aircraft categories, were flat in comparison to the month before (consensus: 0.3%).

They are considered a reliable gauge of investment trends in the economy.

"Orders are lagging oil prices by a few months, so we expect the flat trend to continue through the summer. The oil-led capex meltdown of 2014-to-16 is over, but the recovery is modest. Second quarter GDP growth is going to be mostly a story of rebounding consumption rather than surging capex," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

For her part, Uruci lowered her tracking estimate for second quarter US GDP growth from 2.1% to 2.0%.