New orders for key US manufacturing capital goods unexpectedly rebounded in April, boosting confidence that business spending on equipment could recover in the second quarter after a recent streak of declines.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 1.4% last month, the Commerce Department reported on Friday. Data for March was revised higher to show these core capital goods declined 0.6% instead of 1.1% as previously reported.
Economists polled by Reuters forecast orders for core capital goods to fall 0.2%. Core capital goods orders rose 2.7% on a year-on-year basis in April.
The government reported on Thursday that corporate profits fell in the first quarter, marking the third consecutive quarterly decline. Higher interest rates increase costs for businesses, credit tightening by banks can make it more difficult to implement capital expenditure projects, reducing output.
Orders for electrical appliances, equipment and components fell 1.0%, while orders for computers and electronic products fell 1.4%. Orders for machinery increased 1.0%.
Shipments of core capital goods rose 0.5% in April after falling 0.2% in March. Shipments of core capital goods are used to calculate equipment expenditure in the measure of gross domestic product. Business spending on equipment has declined for two consecutive quarters, the first consecutive decline since 2020.
