WASHINGTON — New orders for key U.S.-manufactured goods rose sharply in May, according to data released on Thursday by the Commerce Department, offering a sign that business investment remained resilient despite broader uncertainty in the manufacturing sector.
Orders for non-defense capital goods excluding aircraft, a closely watched measure of business spending plans, increased 1.6% in May after a revised decline in April, the Commerce Department reported. Economists surveyed by Reuters had expected a smaller gain of about 0.6%. Shipments of those goods also rose during the month.
The increase was driven by stronger demand across several manufacturing categories, including machinery, fabricated metal products, primary metals, electrical equipment and computer-related products, according to the report. Economists said the figures suggested companies continued to invest in equipment and technology despite elevated borrowing costs and recent volatility in global markets.
“The rebound in core capital goods orders points to continued business spending,” economists said in assessments cited by Reuters, while noting that some gains may have reflected higher prices for technology-related products and sustained investment linked to artificial intelligence.
The report came as manufacturers navigated a mixed economic environment. Factory production was unchanged in May after earlier gains, while investment in artificial intelligence infrastructure and computing equipment continued to support portions of the industrial sector, according to separate Federal Reserve data and economist assessments.
Despite the rise in core business investment measures, overall durable goods orders declined in May. The Commerce Department said total orders for long-lasting manufactured goods fell 4.5% after a strong increase in April. The decline was largely attributed to a sharp drop in orders for commercial aircraft and related transportation equipment, categories that often produce large month-to-month swings.
Excluding transportation equipment, however, durable goods orders increased 1.3%, indicating broader demand across manufacturing industries remained positive, according to the department's figures.
The latest data followed a period of stronger business investment. Government figures released on Thursday showed the U.S. economy expanded at a 2.1% annualized rate in the first quarter, supported in part by increased spending on equipment and technology. Business investment in information-processing equipment, including technology linked to artificial intelligence, was among the strongest contributors to growth, according to the Commerce Department.
As of Thursday, economists said the May capital goods data pointed to continued momentum in business investment entering the second quarter, while future manufacturing activity would depend on demand conditions, financing costs and developments affecting global supply chains. Details beyond the Commerce Department's published figures remained unclear.
