WASHINGTON (MNI) - The latest U.S. durables orders data suggest military spending held up the total, masking some underlying weakness.
April durable goods orders surprised at +0.8% in a third monthly gain. The expectation was for a decline.
Ex transport orders posted +0.1%, also a third gain, and ex defense -0.8%.
Headline orders masks the expected weakness, however. To some extent this is the usual seesaw after a strong prior month (March durables orders were +3.6% after revision) or possibly a reversion to the pattern where the first month of each quarter is weak.In April, metals orders posted -0.4%, machinery -2.9%, computers -1.1%, and motor vehicles -1%. Weakness is seen in nondefense capital goods ex aircraft orders at -1.0%. Most of these categories had their worst results since the harsh winter. Boeing Corp. reported 70 new orders for commercial aircraft after a huge 163 in March, so it was no surprise that nondefense aircraft orders were down 4.1%. Defense appeared to bolster orders but not shipments. Non-defense capital goods shipments were down 0.6%, and -0.4% ex aircraft, showing that Q2 capital spending is off to a weak start with slow growth from the Q1 average.