WASHINGTON, (Reuters) - New orders for key U.S.-made capital goods and shipments unexpectedly fell in May, but data for the prior month was revised higher, suggesting moderate growth in business spending on equipment in the second quarter.
The Commerce Department said on Wednesday that orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, slipped 0.2 percent last month. Data for April was revised to show the so-called core capital goods orders surging 2.3 percent instead of the previously reported 1.0 percent rise.
Economists polled by Reuters had forecast core capital goods orders gaining 0.5 percent last month. Core capital goods orders increased 6.8 percent on a year-on-year basis.
Shipments of core capital goods dipped 0.1 percent last month after an upwardly revised 1.0 percent increase in April. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.
They were previously reported to have gained 0.9 percent in April. The drop core capital goods shipments last month, if sustained, suggests a modest contribution to second-quarter GDP growth from business spending on equipment.
Reports on the labor market, consumer spending and the trade deficit have suggested that the economy accelerated sharply in the second quarter. Gross domestic product estimates for the April-June period are as high as a 4.7 percent annualized rate. The economy grew at a 2.2 percent pace in the first quarter.
Business spending is being supported by the Trump administration's $1.5 trillion income tax cut package, which came into effect in January. But there are fears that escalating trade tensions between the United States and its major trade partners could offset the fiscal stimulus.
Last month, orders for electrical equipment, appliances and components tumbled 1.5 percent, the biggest drop in six months, after rising 2.1 percent in April. Orders for computers and electronic products fell 0.1 percent while those for fabricated metals decreased 1.2 percent.
There were also declines in orders for primary metals. But orders for machinery rose 0.3 percent, extending April's 1.7 percent increase.
Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, dropped 0.6 percent in May as demand for transportation equipment fell 1.0 percent. That followed a 1.0 percent decrease in durable goods orders in April.
Orders for motor vehicles and parts plunged 4.2 percent last month, the biggest drop since January 2015, after advancing 1.2 percent in April.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
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