Surprise Drop for Durable Goods

WASHINGTON — New orders for U.S.-made durable goods unexpectedly fell 0.3% in May on sharply lower aircraft orders, according to a government report Friday that nonetheless showed healthy increases in other sectors.

Excluding transportation, the Commerce Department said orders for durable goods -- items meant to last three years or more -- rose 0.7%, slightly more than the 0.6% increase that economists had forecast.

Civilian-aircraft orders, which tend to be volatile, sank 17.9% in May after a revised decline of 29.7% in April. They had increased 59.9% in February and 72.2% in January.

Although economists had not foreseen a drop in overall orders, they had expected the report to show the effects of civilian orders for Boeing Co. returning to more sustainable levels.

The Commerce Department revised April’s reading for overall durable goods orders to a 4.7% drop from a 4.4% fall.

Economists, who on average had forecast a 0.5% rise in May’s orders, said the overall decline last month was disappointing but would not deter the Federal Reserve from a 17th consecutive interest rate hike when its policy-setting Federal Open Market Committee meets next week.

Investors have been speculating that the Fed might raise rates as much as half a percentage point next week or continue its tightening campaign into August.

“I would look past the fact that orders declined and point to [the non-transportation sector], which was up,” said Ken Mayland, president of Clearview Economics in Pepper Pike, Ohio.

“Manufacturing continues to be in darn good shape,” Mayland added.