New orders for U.S. durable goods rose by a weaker-than-expected 0.6 percent in April as volatile transportation orders fell, while initial claims for jobless benefits rose by 15,000 in the latest week, government reports showed on Thursday.
The tepid April increase for durable goods -- often costly manufactured items meant to last three years or more -- followed a sharp upward revision in the March figure to a gain of 5.0 percent from a previously reported figure of 3.7 percent, the Commerce Department said.
The April increase was well below the 1.0 percent rise in total durable goods orders forecast by Wall Street economists in a Reuters poll. The March figure was revised sharply upward to a 5.0 percent gain from a previously reported figure of 3.7 percent.
But some analysts said the data was consistent with recent trends in the economy and did not offer any strong signals to the Federal Reserve on whether to cut interest rates.
"Jobless are as expected, indicating similar conditions on the employment situation with fairly moderate growth and still working off the housing situation, said Robert Lutts, chief investment officer at Cabot Money Management in Salem, Massachusetts.
"Durables ex-transportation was a little more favorable and this will be where we will get earnings growth from. This is more of the same in the economy, a little stronger on the spending and investment side. I think the markets' take on this will be that it is similar to what we have had."
"I would say (the Federal Reserve) will continue to sit on their hands," he added Orders for non-defense capital goods excluding aircraft, seen by economists as a proxy for business investment, rose 1.2 percent in April after a downwardly revised 4.4 percent increase in March. Analysts had predicted a 0.8 percent rise in this category.
U.S. Treasury debt prices fell in response to the better-than-expected figure on business investment, erasing earlier gains, while the dollar rose slightly against the euro but was steady against the yen.
Home Sales Well Above Estimates
Meanwhile, new single-family home sales rose to an annual rate of 981,000 units from a revised rate of 844,000 in March, the Commerce Department said.
Analysts polled by Reuters were expecting April sales to rise to an 860,000 unit pace from a previously reported rate of 858,000 units in March.
In April, the median sales price of a new home fell $28,500 to $229,100 from $257,600 in March.
There were 538,000 new homes for sale in April, a fall from the 546,000 reported in March. It would take 6.5 months to clear that inventory at the current sales pace, less than the 8.1 months recorded in March.
Thursday's data comes a day ahead of another key report that measures the pace of existing home sales -- which represent 85 percent of the housing market.
Analysts polled by Reuters are expecting April existing home sales to rise to 6.14 million unit pace from the 6.12 million in March when that data is released Friday.
Sales were mostly up across the regions, with the South recording the largest gain at 27.8 percent. The Midwest saw a decline of 4.0 percent while the Northeast was up 3.8 percent and the West was up 8.5 percent.
Civilian Aircraft Orders Fall
Meanwhile, the shift in durable goods orders between April and March was due largely to changes in the volatile transportation sector, where orders fell 1.3 percent after a 13.6 percent rise in March.
April non-defense aircraft orders fell 10.7 percent after a 53.6 percent rise in March, while motor vehicle and parts orders fell 1.9 percent after rising 2.7 percent in March.
Stripping the transportation goods out, durable goods orders rose by 1.5 percent in April, the same pace as in March after a small upward revision. Economists had forecast that durables orders excluding transportation would rise 0.6 percent in April.
Robert Barbera, chief economist for ITG, told CNBC’s “Squawk Box” that business spending will add to growth in second quarter rather than subtract from it.
“I think we were all a little confused in the first quarter,” Barbera said Thursday. “The numbers were very weak and yet if you looked at the parts you’d expect to drive business investment – cash available, share price performance, growth abroad – all the things that suggested capital expenditures would help the economy were giving us a green light and yet we had very weak numbers in the first quarter. This puts us back on a reasonable trajectory and it makes sense in light of the general backdrop.”
Durable goods orders excluding defense rose 0.6 percent after an upwardly revised 5.2 percent gain in March.
4-Week Jobless Trends Hit Year Low
The Labor Department said that despite the 15,000 increase in new jobless claims last week, a more reliable barometer of labor trends dropped to its lowest level in more than a year.
Initial filings for state unemployment insurance aid rose to a seasonally adjusted 311,000 in the week ended May 19, from a revised 296,000 in the prior week, above Wall Street economists' expectations for an increase to 305,000.
But the four-week moving average of claims, which irons out weekly variations to give a clearer picture of underlying trends in the labor market, fell for a fourth successive week.
This average dropped to 302,750 from a revised 306,250 in the prior week, hitting the lowest level since late February last year.
The total number of unemployed still on the benefit rolls after drawing an initial week of aid climbed to 2.53 million in the week ended May 12, the latest period for which the data were available, from 2.47 million a week earlier. Economists had forecast that continuing claims would be slightly lower at 2.50 million.