U.S. durable goods orders drop 1.3% in April

U.S. orders for big-ticket manufactured goods dropped unexpectedly in April for the first time in 11 months, pulled down by plunging orders for transportation equipment

Durable Goods (Copyright 2021 The Associated Press. All rights reserved.)

U.S. orders for big-ticket manufactured goods dropped unexpectedly in April for the first time in 11 months as a shortage of computer chips disrupted auto production.

The Commerce Department reported Thursday that orders for factory goods meant to last at least three years fell 1.3% in April after rising 1.3% in March. Transportation orders skidded 6.7%. Excluding transportation, which can swing sharply from month to month, durable goods orders were up 1% in April.

Factories have been hamstrung by a shortage of supplies as the U.S. economy reopens from the COVID-19 pandemic and demand for goods and services rebounds rapidly. Orders for auto parts, disrupted by a shortage of computer chips, dropped 6.2% in April. Orders for military capital goods dropped 25.8% after falling 11.7% in March.

Economists had expected durable goods orders to rise about 0.7% last month. Despite the unexpected decline, the April report also contained hopeful signs: A category that tracks business investment — orders for nondefense capital goods excluding aircraft — increased 2.3% last month on top of a 1.6% gain in March.

“The signal for the manufacturing sector is still positive, although supply chain constraints continue to be a headwind, preventing a complete recovery to pre-pandemic levels," Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note.