April Durable Goods Orders Rebound May 26, 2005

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The April 1.9-percent surge in new orders for durable manufactured goods reported by the Commerce Department suggests manufacturing is emerging from the soft patch it went through in the first 3 months of the year, according to David Huether, chief economist of the National Association of Manufacturers.

"New order for nondefense capital goods --a good proxy for business investment -- increased by 3.8 percent in April, the third-fastest upturn in the past 12 months," Mr. Huether said. "These rising capital goods orders show that the businesses are beginning to shake off the uncertainty that was fostered by rising energy prices earlier this year.

With energy prices moderating and healthy domestic demand expected to continue, firms will begin to spend some of the U.S. $1.2 trillion stored up in corporate coffers on new equipment and software," he continued. "This will help reignite manufacturing sector which I expect will again outpace the overall economy in the second half of the year."

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