Demand for US durable goods decreased less than estimated in May despite a plunge in civilian aircraft orders, according to latest official data, which BMO Capital Markets said suggest overall business equipment spending remains intact.
Orders for tangible items with an average life of at least three years fell 4.5% sequentially to $332.05 billion last month, following an 8.5% gain in April, the Census Bureau said Thursday. The consensus was for a larger 5% decline for May in a survey compiled by Bloomberg.
New orders for transportation equipment slumped 14% last month. Demand for civilian aircraft plummeted 52% in May, following a 167% jump the previous month. Defense aircraft orders increased 7.9% in May, while the motor vehicles and parts component saw a 1.1% gain.
Excluding transportation, durable goods orders rose 1.3% in May, higher than Wall Street's 0.6% growth view, official data showed.
"Strong durable goods orders in May, outside of aircraft, signal little letup in American business equipment spending," BMO Senior Economist Sal Guatieri said in a note. "The real story is the widespread robust increases across nearly every other major industry group, not just computers, but general machinery, primary and fabricated metals, and autos."
Earlier this month, data from planemaker Boeing (BA) showed that it booked orders for 27 jets in May, down sharply from 136 the previous month and 303 a year earlier.
"The US manufacturing recovery is both strengthening and spreading beyond (artificial intelligence)-led equipment spending, adding resilience to the economic expansion," Guatieri said Thursday. "The (latest durable goods orders) data point to another double-digit annualized gain in business equipment spending in the (second-quarter gross domestic product) release."
Separately, official data showed Thursday that US real GDP increased at a 2.1% annualized rate in the first quarter, up from 1.6% growth reported in the second estimate.
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