WASHINGTON (Reuters) -Orders for long-lasting U.S. manufactured goods rebounded sharply in May, boosted by a surge in commercial aircraft bookings, though economic uncertainty stemming from import tariffs remains a constraint for business spending on capital.
Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, jumped 16.4% last month after a revised 6.6% decline in April, the Commerce Department’s Census Bureau said on Thursday.
Economists polled by Reuters had forecast orders increasing 8.5% after a previously reported 6.3% decrease in April.
Transportation equipment orders soared 48.3%, driven by a 230.8% surge in commercial aircraft orders, which are extremely volatile. Boeing reported on its website that it had received 303 aircraft orders, including 150 from Qatar Airways placed during President Donald Trump’s visit to the Gulf Arab country in May.
That compared to only eight orders in April.
Outside the transportation industry, orders were muted. Economists say Trump’s often shifting trade policy has left businesses in limbo while the duties already imposed have increased costs for companies.
The Federal Reserve is also in a wait-and-see mode as policymakers monitor the economic fallout from the sweeping tariffs. Fed Chair Jerome Powell told lawmakers this week the U.S. central bank needed more time to gauge if tariffs pushed up inflation before considering lowering rates.
The Fed last week left its benchmark overnight interest rate in the 4.25%-4.50% range where it has been since December.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rebounded 1.7% in May after an upwardly revised 1.4% decline in April.
Economists had forecast these so-called core capital goods orders edging up 0.1% after a previously reported 1.5% drop in April.
Shipments of core capital goods rose 0.5% after being unchanged in the prior month. Non-defense capital goods orders accelerated 49.4% after plunging 19.1% in April. Shipments of these goods were unchanged after advancing 3.6% in April.
Business spending on equipment accelerated sharply in the first quarter, helping to blunt some of the drag on gross domestic product from a flood of imports as businesses rushed to bring in merchandise before the tariffs came into effect.
The Atlanta Fed is forecasting economic growth rebounding at a 3.4% annualized rate in the second quarter, largely reflecting a reversal in the import flows.
Data on retail sales, the housing and labor markets have suggested economic activity is softening. The economy contracted at a 0.5% pace in the January-March quarter.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
