Durable goods orders in US likely to fall in April

WASHINGTON, May 25 (Bloomberg): Orders for US durable goods probably fell in April, reflecting less demand for aircraft and disruptions in supplies of auto parts stemming from the earthquake in Japan, economists said before a report today. The projected 2.5 per cent decrease in bookings for goods meant to last at least three years follows a 4.1 per cent jump in March that was the biggest in six months, according to the median forecast of 81 economists in a Bloomberg News survey. Orders excluding the volatile transportation category may have gained 0.5 per cent. Bookings for Boeing Co. (BA) aircraft slumped last month and vehicle makers slowed production due to a components shortage that may be short-lived as Japanese manufacturers recover. At the same time, rising overseas sales at Deere & Co. (DE) and General Electric Co. (GE) indicate factories will keep expanding. "Orders are losing some momentum," said Sean Incremona, a senior economist at 4Cast Inc. in New York. "The economy is just grinding upward rather than accelerating, so the trend in business investment is slowing a bit. The Japan situation is a downside risk to manufacturing but it'll be temporary." The Commerce Department's report is due at 8:30 a.m. in Washington. Survey estimates ranged from a drop of 5.7 per cent to a gain of 2 per cent. Economists' forecasts for orders excluding transportation ranged from a decline of 1.2 per cent to an increase of 1.8 per cent. A recurring pattern of declines in equipment orders at the start of a quarter probably also helped depress the April figures, economists said. Non-defense orders for durable goods excluding aircraft, items such as computers, engines and communications gear, declined 2.1 per cent in April, according to the median projection in the Bloomberg survey. Since the end of 2005, these bookings have dropped in the first month of a quarter in all but three instances. Chicago-based Boeing, the world's largest aerospace company, said it received two orders last month compared with 98 in March. Industry data may not correlate precisely with the government statistics on a month-to-month basis. Disruptions related to the March earthquake and tsunami in Japan led to a plunge in U.S. automobile output, causing industrial production to stall in April, a Federal Reserve report showed last week. Economists at JPMorgan Chase & Co. in New York yesterday cut their second-quarter US growth projection to 2.5 per cent from a previous estimate of 3 per cent. "The main factor behind our revision is weaker output of the auto vehicle sector," JPMorgan's chief U.S. economist Michael Feroli wrote in an e-mail. Part of the slowdown in production is due to supply disruptions caused by the disaster in Japan, he said. Other data showed manufacturing in the Philadelphia region grew in May at the slowest pace in seven months, while a measure of the industry in the Richmond, Virginia, region showed contraction. The Federal Reserve Bank of Richmond's gauge dropped to minus 6 this month, the lowest since April 2009. Negative figures indicate manufacturing was shrinking.