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Wednesday, June 24, 2009; 2:55 PM
The manufacturing sector showed further signs of stabilization in May, as orders for durable goods rose more than expected.
The Commerce Department reported this morning that new orders for durable goods such as washing machines, aircraft parts and computers rose 1.8 percent to a seasonally adjusted $163.9 billion. It was the second increase in three months.
Most analysts had expected durable goods orders to drop 0.5 percent.
Excluding defense, capital goods orders increased 10 percent, a much stronger showing than in April. Orders for nondefense capital goods help gauge future business investment.
A drop in business investment in the first quarter was a drag on economic growth. As consumer spending fell, businesses were left with stockpiles of unsold goods. This morning's report suggests that businesses have reduced inventories enough to revive investment.
Machinery orders jumped 7.7 percent, and computer orders were up 2.2 percent.
"The strong gain in durable goods orders is another encouraging sign that the economy is gradually moving towards recovery," Global Insight economist Brian Bethune wrote in a note to clients this morning.
