Durable goods orders surge in May, but new-home sales dip
WASHINGTON -- Orders to factories for big-ticket manufactured goods rose sharply for a second straight month in May, and a key indicator of business investment surged by the largest amount in nearly five years. But another report showed that new-home sales dipped in May, as the bumpy economic recovery continues.
The Commerce Department said Wednesday that demand for durable goods rose 1.8% last month, far better than the 0.6% decline that economists expected. It matched the rise in April, with both months posting the best performance since December 2007, when the recession began.
Orders for non-defense capital goods, a key proxy for business investment plans, jumped 4.8%, the biggest increase since September 2004. That could signal that businesses have stopped trimming their investment spending.
The back-to-back monthly gains in orders for durable goods, or items expected to last at least three years, were further evidence that a dismal stretch for U.S. manufacturers may be nearing an end. Still, analysts say any sustained rebound is still months away.
The Commerce Department said separately that new-home sales dropped 0.6% in May to a seasonally adjusted annual rate of 342,000, from a downwardly revised April rate of 344,000.
Sales were down nearly 33% from May last year.
May's results missed economists' expectations of a 360,000 sales pace, according to Thomson Reuters.
The median sales price of $221,600 was down 3.4% from a year earlier but still up 4.2% from April.
American companies have been forced to trim millions of workers as they struggle with the longest U.S. recession since World War II. U.S. businesses also have faced a sharp drop in exports as many major overseas markets struggle with their own downturns.
Excluding transportation, orders for durable goods posted a 1.1% rise in May, also better than the 0.4% drop that had been expected.
Demand for transportation products rose 3.6%, reflecting a 68.1% surge in orders for commercial aircraft, a volatile category that had fallen 1.4% the previous month.
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