Chill Spreads to Durable Goods

Orders for big-ticket items plunge more than predicted, clouding recovery forecasts
By M. Morris,  Newser Staff
Posted Jun 27, 2007 10:16 AM CDT
Shoppers view clothes washers and dryers at a Best Buy store in West Hollywood, Calif., Friday, March 23, 2007. The government said Wednesday, March 28, 2007, durable goods orders rebounded last month,...   (Associated Press)
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(Newser) – Orders for durable goods nosedived in May, suggesting that sunny forecasts for business spending may be overly optimistic. The 2.8% drop, the first decline in 4 months, nearly tripled the predicted 1% dip, Bloomberg reports. Excluding the volatile transportation sectors, the figure was off 1%, Commerce Department stastics released today showed, against a projected .2% rise.

Demand for products designed to last longer than 3 years had risen 1.1% in April, the third straight month of gains and a sign of economic growth. Analysts didn't expect the manufacturing sector to maintain that pace, but the disparity raised concerns. Says one economist: "It's clear that businesses are being cautious in light of the softness in the economy."