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Transportation orders return US durable goods to growth in May

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Orders for US automotive equipment grew in May even as the sector struggles with a shortage of semiconductors./AFP
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Jun 25, 2021 - 08:58 AM

WASHINGTON — Orders for big-ticket manufactured goods grew in May after contracting the month before, with transportation orders leading the increase, government data said Thursday.

Durable goods orders rose 2.3 percent to $253.3 billion last month, the Commerce Department said, slightly less than expected but an improvement on the 0.8 percent upwardly revised decrease seen in April.

Transportation equipment made up the majority of the increase, ending two months of declines with a 7.6 percent gain to $74.2 billion. Orders for nondefense aircraft and parts, like Boeing’s airplanes, grew 27.4 percent.

Excluding transportation, durable goods orders rose 0.3 percent, weaker than expected.

“Total durable goods orders rose less than expected in May although the gain more than reversed a decline in April,” Rubeela Farooqi of High Frequency Economics said.

“Strong demand and lean inventories are still supportive of the manufacturing sector. But supply bottlenecks and a rotation from goods to services could be constraints over coming months.”

Capital goods saw strong growth, with a 4.2 percent increase in orders. Defense capital goods rose 17.4 percent.

Motor vehicles and parts, which are part of transportation equipment, grew 2.1 percent, even as the sector battles an ongoing shortage of semiconductors that fueled an 8.1 percent drop in April.

Computers and electronic product orders declined 0.3 percent, with 1.9 percent growth in communications equipment offset by a 1.4 percent decline in computers and related products.

“Manufacturing is in good health,” Ian Shepherdson of Pantheon Macroeconomics said. “Surveys suggest that activity in the sector is no longer accelerating, but growth is strong.”

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