Orders for durable goods drop 0.5% in April

Orders for long-lasting goods slipped in April but a measure of business investment rebounded solidly from a prolonged downturn.

Orders for manufactured durable goods such as aircraft, metals and electrical equipment fell 0.5%, in line with economists' estimates, the Commerce Department said Tuesday.

But demand for items excluding aircraft and defense – which is equivalent to business capital spending — rose 1%, exceeding economists' estimate of a 0.3% gain. Also encouraging: March's 0.5% decline in such "core" orders was revised to a 1.5% increase.

The closely-watched measure of business investment had fallen six straight months since last summer as a strong dollar made US exports more expensive for foreign buyers. But the dollar has retreated a bit against a basket of currencies recently. Although it's expected to resume its climb as the Federal Reserve begins to raise interest rates, economists expects a far more modest increase than last year.

Also contributing to the upturn were milder weather and the resolution of a labor dispute at West Coast ports that hampered shipments.

"It does appear that a spring rebound is developing," economist Paul Ashworth of Capital Economics wrote in a note to clients.

In April, orders for commercial aircraft fell 4% but that followed a 41% rise in March. Orders for defense aircraft fell 12.8% after more than doubling the previous month. Motor vehicles and parts edged up 0.3%.

Bolstering business investment was a healthy 3.1% rise in orders for machinery and a 1.9% increase for fabricated metals. Bookings for computers, however, dropped 3.6%

Despite the improvement, several measures of business orders remain below year-ago levels.

"While these data are encouraging, it is clear that the economy's post first-quarter reawakening will not be as strong as in 2014," says economist Cliff Waldman of MAPI, the manufacturing industry's research arm.