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Suzy Evans/MEDILL

 New orders for durable goods rose 1.9 percent in April, while new orders for transportation equipment rose 5.4 percent.


New orders for durable goods rose 1.9 percent in April after dropping in March

by Suzy Evans
May 28, 2009


New orders for durable goods increased 1.9 percent to a seasonally adjusted $161.45 billion in April, boosted by large increases in transportation equipment orders, the U.S. Census Bureau reported Thursday.

The rise in new orders for durable goods, or manufactured items that last a minimum of three years, comes on the heels of a 2.1 percent decrease in March, revised from the earlier reported 0.8 percent decline. Orders have risen in two of the last three months.

Economists polled by Bloomberg LP expected a 0.5 percent increase in April.

Excluding the rise in transportation, durable goods orders rose 0.8 percent last month. Excluding defense, new orders rose 1 percent.

Durable goods orders tumbled 27.3 percent year over year on an unadjusted basis.

Cliff Waldman, an economist for the Manufacturers Alliance/MAPI, a public policy and economics research organization in Arlington, Va., called Thursday’s release a “moderately positive report.” While he views the worst of the recession as being over, he doesn’t know whether Thursday’s report signals a definite recovery.

“The sharp U.S. and manufacturing downturns are probably over,” Waldman said. “The plunging is over. There’s some good signs out there. But there’s a lot of things that suggest that any real recovery is somewhat away and that it’s not going to be strong.”

Waldman was particularly discouraged by the drop in new orders for non-defense capital goods because a turnaround in the orders would indicate an increase in capital spending and business equipment spending. The orders fell 2 percent to $49.46 billion, the second straight monthly decline.

Orders for nondefense capital goods excluding aircraft – a key measure of business equipment spending – decreased 1.5 percent.

However, capital spending tends to rise after the overall economy has started to recover because business executives want to be certain that the economy is getting better before they make big investments, Waldman added.

Dan Bianchi, assistant director of the Chicago Manufacturing Renaissance Council, an association of the Chicago area’s business, labor, community and government leaders, said the slight bump in new orders for durable goods could be attributed to the stimulus package, and noted that investors should react with cautious optimism.

“The trend seems to be more people are encouraged by what’s happening, but I think it’s [a] slow uptick in the right direction,” Bianchi said.