US durable goods orders shrink unexpectedly in May

Orders in the US for goods made to last more than three years, a key gauge of business investment, softened unexpectedly in May, amid drops in those for civilian and military aircraft.

According to the Department of Commerce, total durable goods orders shrank by 1.3% month-on-month to reach an annualised pace of $243.4bn and were 1.0% higher on a year ago.

Economists had penciled-in a flat reading against the month before.

Excluding the transportation sector however, orders grew by 0.3% versus April to $163.4bn (consensus: 0.1%), although excluding defence they weakened by 0.6%.

Orders for machinery grew by 0.7% to $32.82bn and those for computers and electronic products by 0.8% to $24.1bn.

Transportation equipment orders meanwhile fell by 4.6% to $79.99bn with those of civilian aircraft declining by 28.2% to $5.34bn and those of military jets and parts down by 15.3% to $4.5bn.

Capital goods orders excluding those from the defence sector as well as those for aircraft, a lead indicator for durable goods orders, grew by 0.4% versus April to reach $68.95bn and were up by 2.3% on a year ago.