U.S.
core capital goods orders rise; transportation orders fall
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[June 23, 2015] WASHINGTON
(Reuters) - A gauge of U.S. business investment spending plans rebounded
in May, offering a tentative sign of stabilization in the manufacturing
sector after activity weakened sharply early this year.
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But the lingering effects of lower oil prices and a strong dollar
will continue to constrain factory activity for a while.
The Commerce Department said on Tuesday non-defense capital goods
orders excluding aircraft, a closely watched proxy for business
spending plans, rose 0.4 percent last month. These so-called core
capital goods orders slipped 0.3 percent in April.
Manufacturing has been pressured by investment spending cuts in the
energy sector in the aftermath of a more than 60 percent plunge in
crude oil prices last year, as well as dollar strength.
The number of U.S. oil drilling rigs has dropped to near five-year
lows, prompting oilfield companies like Schlumberger <SLB.N> and
Halliburton <HAL.N> to slash their capital expenditure budgets for
this year. However, the pace of decline in oil rig counts has slowed
in recent weeks as crude prices edged higher.
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The dollar has gained about 12 percent against the currencies of the
United States' main trading partners since June 2014, taking a bite
out of the profits of multinational corporations. Factories also
have been hampered by businesses placing fewer orders while working
through a stockpile of goods accumulated last year.
Manufacturing is lagging other economic data, including housing and
retail sales, which have rebounded after hitting a soft patch at the
start of the year.
Economists polled by Reuters had expected core capital goods orders
to rise 0.5 percent last month.
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Shipments of core capital goods, which are used to calculate
equipment spending in the government's gross domestic product
measurement, increased 0.3 percent in May after a downwardly revised
0.3 percent increase in April.
Shipments in April were previously reported to have increased 0.5
percent.
A 6.4 percent drop in transportation equipment, however, weighed
down overall orders for durable goods - items ranging from toasters
to aircraft that are meant to last three years or more - which fell
1.8 percent last month.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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