Durable-Goods Orders Up
Orders to U.S. factories for big-ticket manufactured goods shot up in May, rising a bigger-than-expected 6 percent, led by a burst in demand for electronics equipment.
The Commerce Department said Wednesday that last month's increase in orders for durable goods - items expected to last at least three years - was the largest gain since December and left orders at a seasonally adjusted annual rate of $218.9 billion.
The gain was twice as big as the 3 percent increase many analysts were expecting. The durable-goods data, economists have cautioned, tend to be volatile and can swing widely from month to month.
In April, durable-goods orders fell 5.7 percent, which was a stronger performance than the 6.4 percent drop the government previously estimated.
Last month's performance largely reflected a 26 percent increase in orders for electronics and electrical equipment, including semiconductors, circuit boards and home appliances. That was the largest gain since August 1997. In April, such orders fell a steep 17.6 percent, not as bad as the record 20.1 percent drop the government estimated a month ago.
The Federal Reserve has boosted interest rates six times since last June to slow the supercharged economy and keep inflation from becoming a problem.
The Fed's rate increases are designed to raise borrowing costs and cool demand for big-ticket items such as cars and homes.
Other recent economic data - including a rise in the nation's unemployment rate in May and lackluster retail sales - have suggested that the central bank's rate increases are working to cool the economy down a bit.
Orders for transportation equipment rose 3.5 percent in May, led by an increase in demand for cars, ships and tanks. That followed a 6.4 percent decline the month before.
Excluding the volatile transportation sector, durable-goods orders went up by a whopping 6.6 percent - the largest gain since January 1985. The transportation sector is volatile from month to month because it includes such costly items as airplanes.
Primary metals, the category that includes steel, saw orders rise 1.1 percent in May after falling by the same amount in April.
Orders for industrial machinery, including computers and machine tools, however, fell in May by a slim 0.1 percent after posting a sizable 3.6 percent gain the month before.
Shipments of big-ticket items, a good sign of current demand, grew by a solid 2.2 percent in May following a 1 percent decline.
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