New durables orders climb 1.9 pct in April

Demand for big-ticket manufactured goods soared by the largest amount in 16 months in April, the second increase in the past three months.

The Commerce Department reported Thursday that orders for durable goods rose by 1.9 percent in April, more than four times the 0.4 percent increase that had been expected. But the government revised down its estimate for new orders in March to show a drop of 2.1 percent, a much bigger fall than the 0.8 percent decline previously reported.

Still, new orders have risen in two of the past three months after having recorded six straight declines. Analysts believe this could be signalling that the deep recession in manufacturing may be bottoming out. But they believe a sustained rebound is still some distance away.

The 1.9 percent April increase in orders was the largest one-month gain since orders advanced by 4.1 percent in December 2007, the month that the current recession began. Since that time, American manufacturers have struggled with falling demand at home and in foreign markets.

Excluding the volatile transportation sector, new orders posted a 0.8 percent increase, also much better than expectations. New orders excluding transportation fell by 2.7 percent in March.

The overall economy, as measured by the gross domestic product, shrank at annual rates of 6.3 percent in the fourth quarter and 6.1 percent in the first three months of this year. It was the worst six-month performance for the GDP in a half-century.

But many analysts believe that the worst part of the recession is coming to an end. They expect GDP to decline by a smaller 2 percent to 3 percent in the current quarter and then turn slightly positive in the second half of this year.

More than 90 percent of economists surveyed by the National Association for Business Economics are predicting that the current recession, now the longest since World War II, will end either in the third quarter or by the fourth quarter of this year.

The strength for durable goods orders in April came in a number of areas. Transportation orders rose by 5.4 percent as orders for motor vehicles and parts jumped by 2.7 percent, the biggest one-month gain since July 2007. However, even with the increase orders for motor vehicles remain at depressed levels as the nation’s car companies continue to struggle.

Orders for commercial airplanes fell by 6.8 percent in April but orders for military aircraft were up 1 percent.

Other areas of strength in April were defense capital goods which soared by 23.2 percent and machinery orders which were up 2.7 percent. Orders for primary metals such as steel rose by 1 percent and demand for communications equipment rose by 6.9 percent.

Copyright 2009 The Associated Press.