Although there have been many reports of manufacturing slowdowns, orders for U.S. durable goods, products meant to last three years or more, increased more than expected in April, Reuters reported. The U.S. Commerce Department revealed long-lasting product orders rose by 3.3 percent. The economy is demonstrating resilience despite fiscal austerity measures. The reports were mixed since output decreased, but manufacturing activity was boosted by durable good orders.
Bloomberg predicted the growth in durable goods would only be 1.5 percent. Earlier data showed factory output decreased for the second straight month from the European debt crisis leading to drops in demand. The economy is expected to continue growing slowly with foreign government austerity detracting from some of the strength. Despite government regulations and tax increases, consumer spending has remained high. The outlook was positive for business growth as well. Orders for non-defense capital goods such as computers, engines and communications equipment increased, indicating businesses are investing for future growth. Transactions were off to a slow start in the second quarter, showing companies were focused on spend management during economic uncertainty.
Automotive manufacturing was a bright spot for the overall outlook. Ford is responding to increased demand by adding more workers to increase capacity to build an addtional 200,000 vehicles per year in North America, Bloomberg stated. U.S. sales of cars and pickup trucks have risen, and the increase of manufacturing is coming from a slowdown in inventory.
The predictions that businesses will invest in new equipment for growth and suggestions of improvements to the housing market indicate the economy will continue to grow, though progress will be slower, Bloomberg stated. Federal government spending cuts, fewer exports and increased payroll taxes will most likely impede growth.