US core capital goods orders fall in April

New orders for key U.S.-manufactured capital goods unexpectedly fell in April after hefty gains in the prior months, but demand remains underpinned by an artificial intelligence spending boom.

Non-defense capital goods orders excluding aircraft — a closely watched proxy for business spending — dropped 1.1 percent last month after an upwardly revised 3.9 percent jump in March, the Commerce Department’s Census Bureau said on Thursday.

Economists polled by Reuters had forecast these so-called core capital goods orders would rise 0.4 percent. Core capital goods orders also soared in February, helping business spending on equipment to post double-digit growth in the first quarter.

Businesses are ramping up AI investment, fueling demand for information processing equipment and other related products. That trend is helping to prop up manufacturing and limit the impact from supply chains that have been disrupted by the U.S.-backed war with Iran, along with accompanying price surges for commodities like oil and aluminum. Some parts of manufacturing are still dealing with the effects of import tariffs.

Orders for computers and electronic products fell 0.7 percent. However, there were increases in orders for electrical equipment, appliances and components, as well as machinery, primary metals and fabricated metal products. Core capital goods shipments rose 0.4 percent in April after increasing 1.3 percent in March.

Orders for durable goods — items ranging from toasters to aircraft that are meant to last three years or more — shot up 7.9 percent last month after advancing 1.3 percent in March.

They were lifted by a 165.9 percent jump in non-defense aircraft and parts orders. Boeing reported that it had received 136 orders in April, most of them for more expensive models. That compared to 33 orders in March.

Reuters

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