U.S. Durable Goods Orders Fall Sharply for Second Straight Month

U.S. orders for durable goods sank sharply for a second month in April as the coronavirus pandemic wreaked havoc on the manufacturing industry.

Bookings for goods meant to last at least three years decreased 17.2%, the most since August 2014, after a revised 16.6% decline in March, Commerce Department data showed Thursday. The median projection in a Bloomberg survey of economists called for a 19% decrease.

Revised data on Thursday from the Commerce Department showed first-quarter gross domestic product shrank at an annualized 5% pace as consumer spending and business investment dropped sharply.

Factories in the last two months bore the brunt of the sharp cutback in demand amid the nationwide lockdown. While states have begun letting business reopen, manufacturing will be slow to recover as fewer people shop and businesses rein in capital spending projects.

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Closely watched core capital goods orders, which exclude aircraft and military hardware, dropped 5.8% in April after a 1.1% decrease a month earlier. Shipments of those goods, a proxy for equipment investment in the government’s gross domestic product report, fell 5.4%.

The Commerce Department’s revised GDP data showed business fixed investment dropped at a 7.9% annualized rate. Equipment spending plummeted at a 16.7% pace. The report signals the end of the longest U.S. economic expansion and the start of what’s likely to be the deepest recession in at least eight decades.

Corporate profits slumped an annualized 13.9% in the first quarter, according to the GDP report, indicating companies may continue to pull back on capital spending projects until earnings improve.

The durable goods data showed broad declines in orders, including a 47.3% plunge in bookings for transportation equipment such as motor vehicles. Excluding transportation, durable goods orders fell 7.4%, the most since January 2009.

In a separate report released Thursday, initial jobless claims for regular state programs totaled 2.12 million in the week ended May 23, while benefit rolls declined for the first time during the pandemic.

— With assistance by Sophie Caronello

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