Durable Goods Orders Jump 1.9% in April

Orders to U.S. factories for big-ticket manufactured goods shot up 1.9 percent in April, the government reported Wednesday, reflecting strong demand for autos, appliances and aircraft.

The Commerce Department (search) said it was the best showing in five months. Demand for durable goods, items expected to last at least three years, rose by $3.71 billion to a total of $200.3 billion last month, after adjusting for normal seasonal variations.

The increase, which followed four straight monthly declines, was better than the 1.3 percent gain that analysts had been expecting and provided further evidence that an economic slowdown in March could be short-lived.

The 1.9 percent jump in durable goods orders (search), the largest advance since a 2 percent increase last November, followed four straight monthly declines including a sharp 1.6 percent drop in March. That decline had raised worries that the economy could be faltering as consumer and business confidence were jolted by higher energy bills.

But several stronger-than-expected reports of April activity have eased fears of a prolonged slowdown.

The government will release a revised report on economic growth in the January-March quarter on Thursday, and many analysts expect the rate of increase in the gross domestic product will be revised upward to a healthier 3.6 percent rate from the originally reported 3.1 percent GDP (search) growth rate, which had been the slowest pace in two years.

The jump in April orders provides hope that the economy will continue on a solid growth path in the months ahead. Leading the advance was an 8.2 percent surge in orders for transportation equipment, the biggest increase since last November.

Demand for motor vehicles and parts rose by 3.4 percent while orders for commercial aircraft were up 28.2 percent and demand for military aircraft rose by 26.3 percent.

Excluding transportation, orders would have edged down a slight 0.2 percent in April.

Demand for computers and other electronic products fell by 5.8 percent after having posted a 4.7 percent gain in March while orders for communications equipment were off an even larger 18.8 percent, reversing a 10.3 percent jump in March.

Orders for non-defense capital goods, viewed as an indicator of business plans to expand and modernize, rose by 3.8 percent in April, the best showing since a 7.7 percent surge last November.

Orders for business capital goods had been weak in the first three months of this year, reflecting the expiration at the end of last year of popular tax deductions which had been designed to encourage sales of business equipment as the country struggled to emerge from the 2001 recession.

Businesses, rushing to take advantage of the expiring tax breaks, had pushed up total durable goods orders by 1.5 percent in December and 2 percent in November.