US core capital goods orders fall in April

[WASHINGTON] New orders for key US-manufactured capital goods unexpectedly fell in April after hefty gains in the prior months, but demand remains underpinned by an artificial intelligence spending boom.

Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, dropped 1.1 per cent last month after an upwardly revised 3.9 per cent jump in March, the Commerce Department’s Census Bureau said on Thursday (May 28).

Economists polled by Reuters had forecast these so-called core capital goods orders would rise 0.4 per cent after a previously reported 3.4 per cent surge in March.

Core capital goods orders also soared in February, helping business spending on equipment to post double-digit growth in the first quarter.

Businesses are ramping up AI investment, fuelling demand for information processing equipment and other related products. That trend is helping to prop up manufacturing and limit the hit from supply chains that have been snarled by the US-backed war with Iran, and the accompanying price surges for commodities like oil and aluminum.

Some parts of manufacturing are still dealing with the effects of import tariffs.

SEE ALSO

US Q1 GDP growth revised lower to 1.6% pace

US consumer spending edges up as inflation accelerates

Asean Intelligence

Get insights into businesses across South-east Asia

Get the free report

Orders for computers and electronic products fell 0.7 per cent. But there were increases in orders for electrical equipment, appliances and components as well as machinery, primary metals and fabricated metal products. Core capital goods shipments rose 0.4 per cent in April after increasing 1.3 per cent in March.

Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, shot up 7.9 per cent last month after advancing 1.3 per cent in March.

They were lifted by a 165.9 per cent jump in non-defence aircraft and parts orders. Boeing reported on its website that it had received 136 orders in April, most of them for more expensive models. That number compared to 33 orders in March. REUTERS