Orders placed with U.S. factories for business equipment rose in April by the most in eight months, marking yet another robust month of capital investment fueled by a broader reopening of the economy.
Core capital-goods orders, a category that excludes aircraft and military hardware and is seen as a barometer of business-equipment investment, increased 2.3% after a 1.6% gain a month earlier, Commerce Department figures showed Thursday.
Bookings for all durable goods — or items meant to last at least three years — unexpectedly decreased 1.3% from the prior month, reflecting declines in orders for motor vehicles and military aircraft.
The median estimates in a Bloomberg survey of economists called for a 0.8% increase in total durables orders and a 1% gain in core capital-goods bookings.
The economy’s rebound from the pandemic, solid business investment and lean inventories have powered nondefense capital-goods orders in all but one of the last 12 months.
However, shortages of materials and delivery bottlenecks have driven input prices skyward and hampered factories’ ability to keep up with demand. Unfilled orders for durable goods rose for a second month.
Core capital-goods shipments, a figure that will be used to calculate investment in the government’s second-quarter gross-domestic-product report, increased 0.9% in April.
Business spending on equipment advanced at a 13.4% annualized rate in the first quarter, helping the economy grow at a 6.4% pace, revised data from the Commerce Department showed separately Thursday. Personal spending climbed at an 11.3% rate.
Meanwhile, initial jobless claims dropped for a fourth straight week, indicating steady improvement in the labor market. Initial claims in regular state programs decreased by 38,000 to a fresh pandemic low of 406,000 in the week ended May 22, Labor Department data showed Thursday.
Other gauges of manufacturing activity, like industrial production and the Institute for Supply Management’s manufacturing index, posted solid readings in the month although came in shy of forecasts.
The Commerce Department’s durable-goods data showed an almost 26% drop in military hardware orders, the largest decline since the start of last year. Total durables bookings minus the defense category were unchanged, while orders excluding transportation equipment rose 1%, beating expectations.
Orders for motor vehicles and parts, an industry hit hard by a semiconductor shortage, fell 6.2% in April.