Durable-goods orders and business investments rise more slowly. Is the U.S. economy softening?

The numbers: Orders at U.S. factories for long-lasting goods such as machinery and electronics rose 0.4% in April, signaling the economy was still growing at a steady pace in the early spring.

The increase in durable-goods orders in April was the second weakest reading in seven months. Economists polled by the Wall Street Journal had forecast a 0.7% gain.

Another measure of factory conditions seen as a proxy for business investment also rose by 0.3%, the government said. These so-called core orders strip out the up-and-down transportation sector as well as government spending on military equipment.

They are viewed by investors as a signal of future business prospects.

Big picture: Factories are working at full tilt to meet strong customer demand and business investment is robust, but high inflation and rising interest rates are starting to cause erosion.

Ongoing supply shortages are also a hindrance, a problem that could get worse because of the recent lockdowns in China that delayed the shipment of goods to the United States.

Other reports on manufacturing, particularly more recent ones, point to slight erosion in demand. With the Federal Reserve planning to raise interest rates sharply this year, the U.S. economy is bound to slow.

Key details: Orders for commercial planes climbed 4.3% in April, continuing a recent pattern of big ups and downs.

Ditto for autos, whose orders slipped 0.2%. Carmakers are dependent on sporadic computer chip supplies to finish the production of new vehicles. Customer demand is strong, but the supply is erratic.

New orders rose a mild 0.3% outside the volatile transportation segment.

Bookings increased for machinery, metals and metal parts, and electronic products. They fell for computers and networking equipment.

The increase in so-called core orders, a measure of business investment, was the most positive sign. Business investment has increased 7.3% in the past year, though the rate of growth has steadily slowed since last summer.

Durable goods are products meant to last at least three years.

Looking ahead: The increase in durable goods in April suggests “still-healthy demand,” said economist Priscilla Thiagamoorthy of BMO Capital Markets, but “momentum is likely to slow amid the Fed’s series of aggressive rate hikes.”

Market reaction: The Dow Jones Industrial Average
and S&P 500
fell again in Wednesday trades.