Durable goods orders in US tumbled 17.2% in April
Drop followed a decline of 16.6% in March
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Sales of long-lasting goods tumbled in April, as businesses cut investment in response to the global coronavirus pandemic.
Orders for durable goods -- products designed to last longer than three years such as washing machines, bulldozers and cars -- fell 17.2% from a month earlier, the Commerce Department said Thursday.
Economists surveyed by The Wall Street Journal expected a 17% drop in orders.
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Sales fell across major product categories. Excluding transportation products, which can be volatile, orders fell 7.4%. Excluding defense, orders dropped 16.2%.
In this Sept. 18, 2019, photo a Puckett Machinery Company technician walks past a new heavy duty Caterpillar excavator that awaits modification at Puckett Machinery Company in Flowood, Miss. On Tuesday, Oct. 1, the Institute for Supply Management, a
The drop followed a decline of 16.6% in March. So far this year orders have fallen 11.4% compared with a year earlier.
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Perhaps most ominous is a sharp decline in business investment, which could spell slower economic growth beyond the pandemic. A key measure of business spending -- orders for nondefense capital goods, excluding aircraft -- fell 5.8%. This year they're down 1.3 compared to the same period last year.
"While this recession didn't start with a capital spending slump, the weakness in investment spending could take a long time to dissipate," JPMorgan Funds chief global strategist David Kelly said in a note to clients this week.
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Several factors are restraining investment spending. The pandemic has disrupted supply chains, impairing factories' ability to get key parts.
Depressed oil prices have prompted energy companies to pull back on purchases of drilling equipment. The collapse of air travel has sapped airlines' demand for new aircraft. Boeing Co. orders are down sharply.
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And more broadly, businesses are reluctant to invest in equipment, software and facilities given the uncertainty about how long lockdowns will last, whether the country will suffer a second virus outbreak, and how robust a recovery might be.
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