Business-Equipment Orders Post Best Gain in Four Months
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Orders with U.S. factories for business equipment rebounded in May with the largest increase in four months, signaling corporate investment is holding up despite tensions with major trading partners fueling uncertainty about the outlook.
A proxy for business investment — nonmilitary capital goods orders excluding aircraft — rose 0.4% after a 1% decline in the prior month, according to Commerce Department figures June 26 that exceeded estimates. The broader measure of bookings for all durable goods, or items meant to last at least three years, dropped 1.3%, weighed down by a slump in civilian aircraft orders.
The pickup in equipment orders may ease concerns that unpredictable trade policy is weighing on manufacturers and complicating business investment. Stronger demand would offer more of a tailwind to second-quarter economic growth after a downbeat April figure.
Federal Reserve policymakers, who signaled last week they’re considering an interest-rate cut, are monitoring data such as business investment to decide whether a reduction is warranted at their next meeting in late July.
In separate data earlier this month, a key U.S. factory gauge declined to a two-year low in May, while regional Fed measures have deteriorated in June.
The headline durable-goods figure reflects a 28.2% drop in orders for civilian aircraft and parts after a 39.3% plunge in April. Boeing Co. said earlier this month it booked no aircraft orders in May after just four in April amid continued fallout from crashes of its 737 Max.
