U.S. core capital goods orders, shipments fall in May
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[June 27, 2018]
WASHINGTON, (Reuters) - New
orders for key U.S.-made capital goods and shipments unexpectedly fell
in May, but data for the prior month was revised higher, suggesting
moderate growth in business spending on equipment in the second quarter.
The Commerce Department said on Wednesday that orders for non-defense
capital goods excluding aircraft, a closely watched proxy for business
spending plans, slipped 0.2 percent last month. Data for April was
revised to show the so-called core capital goods orders surging 2.3
percent instead of the previously reported 1.0 percent rise.
Economists polled by Reuters had forecast core capital goods orders
gaining 0.5 percent last month. Core capital goods orders increased 6.8
percent on a year-on-year basis.
Shipments of core capital goods dipped 0.1 percent last month after an
upwardly revised 1.0 percent increase in April. Core capital goods
shipments are used to calculate equipment spending in the government's
gross domestic product measurement.
They were previously reported to have gained 0.9 percent in April. The
drop core capital goods shipments last month, if sustained, suggests a
modest contribution to second-quarter GDP growth from business spending
on equipment.
Reports on the labor market, consumer spending and the trade deficit
have suggested that the economy accelerated sharply in the second
quarter. Gross domestic product estimates for the April-June period are
as high as a 4.7 percent annualized rate. The economy grew at a 2.2
percent pace in the first quarter.
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Containers are stacked on a ship at the Port in Bayonne, New Jersey
during a work stoppage in the harbor of New York January 29, 2016.
REUTERS/Brendan McDermid
Business spending is being supported by the Trump administration's $1.5 trillion
income tax cut package, which came into effect in January. But there are fears
that escalating trade tensions between the United States and its major trade
partners could offset the fiscal stimulus.
Last month, orders for electrical equipment, appliances and components tumbled
1.5 percent, the biggest drop in six months, after rising 2.1 percent in April.
Orders for computers and electronic products fell 0.1 percent while those for
fabricated metals decreased 1.2 percent.
There were also declines in orders for primary metals. But orders for machinery
rose 0.3 percent, extending April's 1.7 percent increase.
Overall orders for durable goods, items ranging from toasters to aircraft that
are meant to last three years or more, dropped 0.6 percent in May as demand for
transportation equipment fell 1.0 percent. That followed a 1.0 percent decrease
in durable goods orders in April.
Orders for motor vehicles and parts plunged 4.2 percent last month, the biggest
drop since January 2015, after advancing 1.2 percent in April.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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