Durable-goods orders slump in April as business investment almost dries up

Bloomberg News

Orders for Boeing aircraft almost dried up in April after the grounding of their 737 Max jet, which caused a decrease in orders for durable goods in the United States.

The numbers: Orders for durable or long-lasting goods collapsed in April due to falling demand for Boeing aircraft and new cars and trucks, but even more worrying, business investment continued to weaken before a tense trade with China and a US economy slower.

Durable goods orders, products destined to last at least three years, fell 2.1% in April, the government said on Friday. The increase in orders in March was also reduced.

Economists surveyed by MarketWatch had predicted a 2.4% decrease in new orders.

If cars and planes are eliminated, orders remained stable. Transportation often exaggerates the ups and downs in orders due to the high demand from one month to the next.

What happened: The big drop in orders last month was mainly related to a drop in reserves for Boeing


pbadenger aircraft. The giant manufacturer received only four orders in April after the global suspension of flights for its 737 MAX planes after a couple of fatal accidents.

However, it also reduced a key measure of business investment known as orders for basic capital goods. The investment fell by 0.9%, the first fall in four months. These orders eliminate aircraft and defense expenses to get a better idea of ​​how much the private sector is investing.

The annual pace of business investment slowed in April to 1.3% from 3.8%, marking the smallest 12-month increase since the last month of Barack Obama's presidency in January 2017.

Read: US manufacturers grow in May at the slowest pace in nine years.

The 2.6% increase in orders for durable products in March was reduced to 1.7%.

Large picture: The manufacturing part of the US economy began to slacken towards the end of last year, a slowdown exacerbated by the trade war with China. A still weak global economy is another obstacle.

Companies are unlikely to dramatically increase spending and investment until the dispute between the United States and China is resolved and the global economy strengthens.

Read: The clash of monsters by trade dwarfs all other issues related to the economy of the United States

The good news is that manufacturers continue to expand, albeit at a snail's pace, and most are not willing to reduce their work force amid a widespread shortage of skilled labor. While the vast majority of Americans continue to work and mbadive layoffs are avoided, the economy is unlikely to stumble.

Market reaction: "This is an April report, the trade war accelerated in May, there will almost certainly be more weakness," said Chief Economist Chris Low of FTN Financial. He and most economists predict that the gross domestic product will decrease in the second quarter.

Market reaction: The Dow Jones Industrial Average

DJIA, + 0.47%

and S & P 500

SPX, + 0.46%

He went up in Friday's operations after a big fall on Thursday. Wall Street has taken a beating in the past week due to concerns that the stalemate in the United States and China could drag on for months and hurt the economy.

Read: The clash of monsters by trade dwarfs all other issues related to the economy of the United States

The 10-year Treasury yield.

TMUBMUSD10Y, + 0.38%

It slipped to 2.33%. Performance has plunged from a seven-year high of 3.23% last October, reflecting a smoother US economy and continued trade tensions.

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