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Demand Strong for US Manufactured Goods in May, Data Shows

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Even as prices continue to rise, orders for US-made, big-ticket manufactured goods were surprisingly strong in May, helped by demand for autos and military aircraft, according to government data released Monday. Online News

Durable goods orders rose 0.7 percent in the month, to $267.2 billion, the seventh increase in the past eight months, the Commerce Department reported.

That was a far stronger result than economists had been expecting, and even excluding the transportation sector, orders also rose 0.7 percent, the report said.

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The increase points to solid demand even as US inflation rages at a 40-year high, but economists warn uncertainty caused by the war in Ukraine may cool business investment plans, which could tamp down orders in coming months.

The US Federal Reserve is on an aggressive campaign to raise interest rates and to cool the economy and douse inflation fires but firms and households still have plenty of cash and pent up demand, in part due to the supply snarls throughout the recovery from the pandemic downturn.

Ian Shepherdson of Pantheon Macroeconomics said he “would be surprised by an outright decline” in orders “given that firms are still cash-rich, in aggregate, the labor market is still very tight, and the backlog of capex (capital expenditures) — especially replacement — from the previous cycle is still enormous.”

Motor vehicle orders rose 0.5 percent, while defense aircraft and parts surged 8.1 percent. But in the civilian arena aircraft orders fell 1.1 percent, the data showed.

In the electronics sector, which has struggled amid a global shortage of computer chips, communications equipment jumped 2.0 percent, but orders for computers fell 0.7 percent.


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