New orders and shipments of capital goods made in the United States rose sharply in May, pointing to sustained strength in business equipment spending in the second quarter, but rising interest rates and tighter financial conditions could slow down. the urge.
The nearly broad advance in orders reported by the US Commerce Department on Monday came despite deteriorating business and consumer sentiment, as well as intensifying fears of a recession.
The gains partly reflected higher prices. The US central bank has been aggressively tightening monetary policy to contain inflation.
Orders for capital goods other than defense and excluding aircraft, a key measure for business spending plans, rose 0.5% last month. The so-called core of capital goods had advanced 0.3% in April. Economists polled by Reuters had predicted those orders would rise 0.3% by a half.
These orders were up 10.2% year-on-year in May. Last month’s advance reflected a 1.1% increase in machine orders.
There was also strong demand for primary metals, as well as computers and electronics. But orders for electrical equipment, appliances and components fell 0.9%, while demand for fabricated metal products remained unchanged.
The larger-than-expected rise in core capital goods orders highlighted underlying strength in manufacturing, which accounts for 12% of the economy, despite weak industry surveys. An S&P Global poll last week showed that business confidence fell in June to the lowest level since September 2020.
Demand for goods remains strong, even as spending returns to services. Production also continues to be sustained by companies that are still rebuilding inventories, even though some big retailers like Walmart and Target have reported they are carrying too much merchandise.
strong shipping
Core capital goods shipments rose 0.8% last month, matching April’s gain. Remittances are used to calculate equipment expenditures in the measurement of Gross Domestic Product. Despite some boost from higher prices, shipments still showed strength after adjusting for inflation.
Orders for durable goods, items ranging from toasters to aircraft and expected to last three years or more, rose 0.7% in May, after rising 0.4% in April. They were boosted by a 0.8% gain in transport equipment orders, which followed a 0.7% increase in April.
Durable goods shipments rose 1.3% last month, after rising 0.3% in April. Unfulfilled durable goods orders advanced 0.3% and inventories were up 0.6%.
A separate report on Monday from the National Association of Realtors showed that its Pending Home Sales Index, based on signed contracts, rose 0.7%. The increase, however, only partially reversed declines over the past six months, leaving contracts down 13.6% year-on-year.
Source: CNN Brasil
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