New orders for manufactured durable goods jumped by 3.6% in May, according to a report issued earlier this morning by the U.S. Commerce Department. This stellar gain, in what is a most volatile series, matched the uptick logged in April, and was the third advance in the past four months. This increase, moreover, suggests that the economy's resilience is not in question, notwithstanding the occasional wrinkles in growth.
Excluding transportation equipment, the gain was a more modest 0.7%. Excluding defense-related goods, the increase for the month was 3.5%. Transportation equipment, also up in three of the past four months, led the way surging by 10.2%.
Meanwhile, new orders for nondefense capital goods soared by 9.3% last month. Orders for defense-related capital goods also gained nicely, rising by 12.0%.
Other areas contributing to the aggregate improvement last month were orders for primary metals, which rose by 0.9%, machinery, which increased by 1.2%, computers and electronic products, which were 2.7% better, and electrical equipment, appliances, and components, which gained a combined 1.4%. Restraining the advance were declines in orders for fabricated metal products and motor vehicles and parts. The big news, and a reason to be especially optimistic going forward, though, was the 9.3% advance in orders for nondefense capital goods, as this is key for business investment, a critical component of any economic expansion.
On the whole, this was a solid report and provides some justification for the Federal Reserve as it strives to slow and eventually end its aggressive monthly purchase of bonds. Later on this morning, we will get additional readings on the economy when the U.S. Commerce Department also reports on new home sales and the Conference Board issues its survey on consumer confidence.