Factory Pickup Leads U.S. Economy Out of Slump as Orders Rebound
by Nina Glinski
8:30 AM EDT
May 26, 2015
Consecutive gains in orders for capital equipment signal American factories, and the economy, are starting to crawl out of a first-quarter slump.
An index that is a proxy for future corporate spending -- bookings for non-military capital goods excluding aircraft -- advanced 1 percent in April after rising 1.5 percent the prior month, according to Commerce Department data issued Tuesday in Washington. Other reports showed the housing market is gaining traction and consumers are feeling a little more confident.
Machinery makers saw the biggest improvement in demand in eight months, indicating more seasonable temperatures and the easing of delays at West Coast ports are ameliorating the damage at one of the hardest-hit producers. A still-strong dollar and relatively low oil prices mean exports and business investment in drilling equipment will be slower to rebound and suggests assembly lines won’t be going full speed soon.
“the worst is probably behind us,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “It’s not a vigorous rebound, but it is getting better.”
Stocks dropped and the spread between short- and long-term Treasury securities narrowed as the better-than-forecast economic data and comments by Federal Reserve officials bolstered bets for an interest-rate increase this year. The Standard & Poor’s 500 Index fell 1.1 percent to 2,103.4 at 1:14 p.m. in New York.
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http://www.bloomberg.com/news/articles/2015-05-26/orders-for-capital-equipment-in-u-s-climb-for-second-month