The US businesses boosted their capital spending in April as new orders for manufactured durable goods to American factories increased by 0.3 percent in April, marking the fifth gain in the last six months, the Commerce Department reported on Monday. Though factory orders rose less than expected in April, but economists have taken the indication for optimism in the strength of demand for capital goods and strengthening of business inventories. In an encouraging indication for economic growth, a benchmark for business investment, non-defense capital-goods orders excluding aircraft, increased 2.1 percent in April, after rising 4.6 percent in March and falling 2.4 percent in February. In addition, orders for manufactured goods increased 0.3 percent, following a revised 4.1 percent increase in March, the Commerce Department reported.
Orders for durable goods, long-lasting items meant to last three years or longer, were amended to demonstrate a bigger-than-expected 0.8 percent rise. Durables orders were earlier reported to have risen 0.6 percent. Orders for vehicles and parts slipped by 3.3 percent, suggesting continuing troubles that domestic automakers are facing with slumped demand in the wake of towering energy prices. On the other hand, orders for commercial aircraft plunged by 10.7 percent after having posted huge gains in the past two months.
The gross domestic product, a gauge of the economy’s full productivity, climbed at a hardly visible 0.6 percent in the first three months of the year, marking continuing slump in the US housing sector. However, these figures would definitely provide some relief to analysts at Wall Street as they can consider that the figure is an indication of the low point for the slowdown. Boosted by recent encouraging figures analysts are now anticipating stronger figures in the time to come. Moreover, their optimism could be restricted if the housing slump deepens further. Besides, rebuilding of inventories is considered to be the biggest strength pushing economic growth higher in the coming months.
US manufacturing sentiment have been unstable in recent months, as firms have looked to cut back new orders in the wake of a general depression in housing and a build-up in supplies of unsold cars. However, in recent weeks, other reports have displayed a clear sing of strengthening in manufacturing, which accounts for 12 percent of the economy. Orders for durable goods, which constitute nearly 60 percent of factory orders, increased 0.6 percent in April after a 5 percent gain in March.
