Economic Watch: April Factory Orders, Construction Spending Rise

June 4, 2014

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New orders for manufactured goods were up for the third consecutive month in April, increasing $3.4 billion or 0.7% to $499.8 billion, the Commerce Department reported on June 3. April's increase followed a 1.5 gain in March.

Excluding transportation, orders rose 0.5% but, excluding defense, orders fell 0.1% at the start of the second quarter. Defense orders rose 39.3% in April, up over 70% in the last 12 months. Capital goods orders rose 3.0% in April. Non-defense orders, however, fell 1.0% in April and capital goods orders, ex-defense, ex-aircraft orders fell 1.2%.

"After yesterday’s ISM release – well after the second, adjusted release – it appears manufacturing is still treading water in the second quarter," said Lindsey Piegza, chief economist at the investment firm Sterne Agee. "While far from robust, activity remains positive. Clearly on the aggregate businesses are still hesitant to ramp up spending, but there are pockets of growth helping to maintain expansionary levels of production. For those anticipating 4% GDP in the near term, however, it does not appear that manufacturing is such an impetus to above trend growth."

Meanwhile, shipments of manufactured durable goods were down 0.1% in April following two consecutive monthly increases. Shipments of transportation equipment led the decline, dropping 0.8% after three consecutive monthly increases.

Construction Spending Rises

The Commerce Department reported on Tuesday that April Construction spending rose to its highest level since March 2009, led by public construction spending. April saw a 0.2% increase bringing spending to an annualized rate of $953.5 billion.

Spending on private construction was at a seasonally adjusted annual rate of $686.5 billion, nearly the same as the revised March estimate of $686.8 billion. Residential construction was at a seasonally adjusted annual rate of $378.5 billion, 0.1% above the revised March estimate of $378.3 billion. Nonresidential construction dipped 0.1% below the March estimate to a seasonally adjusted annual rate of $308.0 billion.

The estimated seasonally adjusted annual rate of public construction spending was $267.0 billion, up 0.8% from March. Highway construction was at a seasonally adjusted annual rate of $81.3 billion, 1.1 percent below the revised March estimate of $82.2 billion.

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