U.S. Durable Goods Orders Up 3.6% in May

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Rogelio V. Solis/APIn this April 27, 2012 photo, washing machines and air conditioners line the aisles of a Cowboy Maloney's Electric City Superstore in Jackson, Miss.
By MARTIN CRUTSINGER

WASHINGTON - U.S. businesses boosted orders for long-lasting manufactured goods in May and a measure of their investment plans rose for a third straight month.

The Commerce Department said Tuesday that orders for durable goods increased 3.6 percent last month, matching April's gain. Most of the increase was because of a surge in commercial aircraft orders. Still, businesses also ordered more computers, communications equipment, machinery and metals.

A key category viewed as a proxy for business investment plans rose 1.1 percent in May, matching similar gains in April and March. The category hasn't increased for three consecutive months since the fall of 2011.

Overall demand for durable goods, items expected to last at least three years, rose to a seasonally adjusted $231 billion. That's 7.7 percent higher than a year ago.

The gains suggest businesses could be growing more confident in the economy, a positive sign for growth. And more demand for durable goods could also accelerate activity at U.S. factories.

Manufacturing has struggled this year, in part because economic weakness around the world has slowed demand for American exports. Economists say that some businesses may also be acting more cautious because of deep federal spending cuts that began in March. One measure of manufacturing activity fell in May to the lowest level in four years.

The overall economy grew at an annual rate of 2.4 percent in the January-March quarter, a figure that will be revised Wednesday. Economists think that figure will remain unchanged.

But many analysts think growth has slowed in the April-June quarter to an annual rate of 2 percent or less. Analysts are more optimistic that economic growth will accelerate in the second half of the year.

The durables report showed that demand for transportation products increased 10.2 percent in May, led by a 51 percent surge in orders for commercial aircraft. Orders for motor vehicles and parts fell 1.2 percent.

Excluding transportation, orders increased 0.7 percent in May. That followed a 1.7 percent rise in April.

Orders for heavy machinery rose 1.2 percent. Demand for computers increased 1 percent. And demand for primary metals such as steel rose 0.9 percent. Orders for communications equipment shot up 12.6 percent.

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