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Surprise gain in durable goods orders bodes well for economy

By
Laura Lorenzetti
Laura Lorenzetti
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By
Laura Lorenzetti
Laura Lorenzetti
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May 27, 2014, 9:37 AM ET

FORTUNE — Orders for long-wearing U.S. Manufactured products unexpectedly increased in April, giving analysts hope for an extended second quarter recovery after a harsh winter dampened growth in the beginning of the year.

Durable good production, which includes items that are meant to last three years or more, like TVS, washing machines and airplanes, rose 0.8%, the Commerce Department said. That was better than the expected 0.7% decrease, according to an average of 68 analyst estimates compiled by Bloomberg. The report is seen as proxy for investment by U.S. Businesses.

April’s gain helps sustain the momentum from March, when durable good orders rose 3.6%, the strongest month since November. The harsh winter was forecast to significantly slow U.S. Factory demand, and the unexpected jump in March raised hopes of an extended recovery in the second quarter.

MORE: Apple plans a big move into ‘smart home’ technology

Expectations are buoyed by a positive economic growth outlook: U.S. Gross domestic product is projected to grow at an annualized rate of 3.5% this quarter, according to the median estimate compiled by Bloomberg.

Removing the more volatile transportation category, durable good orders were up 0.1% in April, better than the flat expectations, according to the Bloomberg analyst average. Transportation equipment led the increase with a particularly strong gain of 2.3%, the seventh monthly gain out of the past eight.

However, airplane makers like Boeing, whose April orders dropped to 70 planes from 163 in the prior month, dragged down the transportation gains. Bookings for commercial aircraft dropped by 4.1% overall.

About the Author
By Laura Lorenzetti
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