Durable goods orders in US surge by most since July 2014

[WASHINGTON] US orders for durable goods jumped in May by the most in nearly six years as nationwide reopenings rekindled demand for a broad range of merchandise and equipment.

Bookings for durable goods - or goods meant to last at least three years - surged 15.8 per cent, the most since July 2014, after a revised 18.1 per cent decline in April, Commerce Department data showed Thursday.

That compared with the median estimate in a Bloomberg survey of economists for a 10.5 per cent increase.

Core capital goods orders, a category that excludes aircraft and military hardware, increased 2.3 per cent, more than twice the median projection.

The rebound in orders reflects the beginning of the manufacturing sector's gradual road to recovery after pandemic-related supply chain disruptions and lockdowns battered the industry and restrained sales. Even so, orders valued at US$194.4 billion in May remain far short of where they were just three months earlier, suggesting the path to recovery will be a long one.

Shipments of core capital goods, a figure economists use to calculate gross domestic product, climbed 1.8 per cent in May. GDP in the second quarter is forecast to post its steepest annualised decline in records dating back to the 1940s. In the first quarter, GDP shrank an annualised 5 per cent, the government's third estimate showed Thursday.

Transportation equipment orders jumped nearly 81 per cent in May, including a 27.5 per cent increase in motor vehicles and parts. The value of commercial aircraft bookings rose to US$3.1 billion after a decline of US$8.6 billion, which reflected order cancellations. Nondefense capital goods orders including aircraft rose 27.1 per cent in May.

Excluding transportation, durable goods orders increased 4% after falling 8.2 per cent.

BLOOMBERG