Census Bureau data yesterday showed total durable goods demand declined 0.5 percent, as forecast. The drop in demand for total durable goods, which are goods that are meant to last three years or more, followed a 5.1 percent jump in March that was the biggest since July and greater than previously reported.
Orders for capital equipment rose in April for a second straight month, a sign U.S. business investment could pick up in the second half of the year. Bookings for non-military capital goods excluding aircraft advanced 1 percent after a 1.5 percent gain in March which was larger than previously estimated. Core durable goods orders which are excluding transportation items increased 0.5 percent after a 0.6 percent advance a month earlier.
Demand for U.S. goods overseas remains soft, as the U.S. dollar gained against global currencies. Sales of American-made products to foreign customers climbed in March for the first time in five months as a labour dispute at West Coast ports was resolved.
In a separate report, consumer confidence unexpectedly increased in May from a four-month low as Americans grew more optimistic about the economy and employment opportunities.
Higher home values, near-record stock prices and a stronger job market have helped stabilize confidence even in the face of rising petrol prices. A sustained pickup in wage growth is probably needed to propel consumer spending after a first-quarter setback.
The Conference Board’s data showed Americans’ assessments of current and future labour-market conditions improved. The share of Americans who said jobs were plentiful increased to 20.7 percent in May from 19 percent. “When you look at the backdrop for spending -- not just confidence but also income and wealth -- they’re all suggesting there should be more spending.”
A consistently stronger economic outlook -- backed by more jobs and faster wage growth -- will be needed to return consumer spirits to their pre-crisis highs. That may in turn help households feel more comfortable boosting their spending, which accounts for about 70 percent of the economy.
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