Ahead of the Bell: US durable goods

Orders to US factories for long-lasting manufactured goods expected to show drop in April

Associated Press
US durable goods orders stumbled in February
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In this March 13, 2015 photo, a worker inspects a new 2015 aluminum-alloy body Ford F-150 truck at the company's Kansas City Assembly Plant, in Claycomo, Mo. The Commerce Department releases its February report on durable goods on Wednesday, March 25, 2015. (AP Photo/Charlie Riedel)

WASHINGTON (AP) -- The Commerce Department releases its April report on orders to U.S. factories for durable goods at 8:30 a.m. Eastern Tuesday.

ORDERS DOWN: The expectation that orders for durable goods, items expected to last at least three years, fell by 0.5 percent in April, according to a survey of economists by data firm FactSet.

MANUFACTURING SLOWDOWN: Manufacturing has gone through a slowdown, hurt by a strong dollar and economic weakness overseas.

Demand in a key category that is viewed as a proxy for business investment spending has been weak since last August. This sector did manage a tiny 0.1 percent advance in March and analysts will be watching closely to see if there is a further increase in April.

One problem has been in the energy sector, which has cut back on investment plans in response to the sharp fall in global energy prices over the past year.

U.S. factories have been struggling with weak exports, which have been clipped by a big rise in the value of the dollar. A stronger dollar makes U.S. exports more expensive in overseas markets. It also lowers the cost of imported goods, making them more attractive for American consumers.

The overall economy, as measured by the gross domestic product, grew at a meager annual rate of 0.2 percent in the January-March quarter, according to the government's first estimate. That figure will be revised on Friday and many economists believe it will show that GDP actually contracted in the first three months of the year at an annual rate of around 0.6 percent.

But economists believe there was a rebound in activity in the April-June quarter with many expecting growth to recover to a rate of 2 percent or better.

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