Factory orders fall short in April

WASHINGTON -- Orders placed with American factories rose less than forecast in April, while gains in capital goods spending may presage stronger business investment in coming months.

Bookings increased 0.3 percent, following a 4.1 percent gain in March, the Commerce Department said yesterday in Washington. Excluding transportation equipment, orders gained 0.7 percent after a 2.4 percent gain in March.

The slowdown in orders may be temporary, economists said. Demand is likely to pick up as the economy recovers from the slowest expansion in more than four years, they added. The signs of a rebound in business spending are consistent with the Federal Reserve's projection of faster growth later this year and into 2008.

After the report, the yield on the benchmark 10-year US Treasury note fell 2 basis points to 4.93 percent. Stocks and the dollar were little changed. Factory orders were forecast to rise 0.7 percent, according to the median estimate in a Bloomberg survey of 66 economists. Forecasts ranged from 0.2 percent to 2 percent.

Orders for durable goods, which make up about 55 percent of factory demand, rose a revised 0.8 percent after a 5.1 percent increase in March. The government last week, in a preliminary estimate, reported a 0.6 percent rise in durables orders.

Orders for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 2.1 percent after a 4.6 percent gain. The Commerce Department had previously estimated a 1.2 percent gain. Shipments of these goods, part of the government's calculation of gross domestic product, rose 1.0 percent after rising 1.6 percent.

Bookings for nondurable goods, including food, petroleum, and chemicals, fell 0.2 percent in April after rising 2.9 percent in March. Orders of nondurable consumer goods, which includes apparel, food, and beverages, fell 1 percent after a 4 percent gain.