By Alice Seeley
The U.S. Census Bureau announced on May 25 that orders placed with U.S. factories for durable goods, items meant to last at least three years, increased by 0.4% to $265.3 billion in April. This follows a 0.6 % increase a month earlier in March. However, the figures have not been adjusted for inflation yet.
Goods, such as passenger planes and automobiles, declined by 0.4% in April. Meanwhile, orders for core goods, a more accurate measure of demand that excludes transportation and military hardware, jumped 0.3% in April, down from a 1.1% gain recorded in the prior month. These numbers are below those predicted by economists polled by Bloomberg, who forecasted an 0.6% increase in orders for all durable goods and a 0.5% gain in orders for core goods.
The figures suggest companies are still carrying on and that U.S. factories are producing large amounts of goods, even as they still struggle with supply chain issues, a labor shortage, and the highest inflation in decades. It is unclear if record-high inflation will force these businesses to reconsider the current pace of investment later this year.
There are signs that a slowdown in durable goods orders is in the near future. The Federal Reserve Bank of Philadelphia’s capital expenditures index now dropped in May to a six-year low, while a similar gauge from the New York Fed was the weakest since August. Earlier this month, the Bureau of Labor Statistics showed that gross domestic product unexpectedly shrank in the first quarter of the year, marking the worst performance since the spring of 2020, when the economy was struggling with COVID shutdowns effects on the economy.
