27.05.201818:54:00UTC+00U.S. Business Investment Grew in April

A proxy for business investment grew at a strong pace in April, but overall durable goods orders dropped in the same month as a result of a fall in aircraft demand.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, soared 1.0 percent in April. The increase in the so-called core capital goods orders reversed March's 0.9 percent decline.

Shipments of core capital goods rose 0.8 percent last month after dropping 0.7 percent in March. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.

Business spending on equipment slowed in the first quarter after double-digit growth in the second half of 2017. Moderate growth is expected in the second quarter.

Order for durable goods, products designed to last at least three years such as computers and machinery, fell 1.7 percent from the previous month to a seasonally adjusted $248.5 billion in April, according to the Commerce Department. The figure was pulled down by a 29 percent slump in orders for civilian aircraft.

However, transportation orders are volatile and bounce around from month to month. Excluding them, durable goods orders increased 0.9 percent. Orders for computers, appliances and other electrical equipment and motor vehicles all rose.

The report from the Commerce Department contributed to data on consumer spending in suggesting momentum in the economy. That supports expectations the Federal Reserve will hike interest rates in June. The U.S. central bank raised borrowing costs in March and forecast at least two more rate hikes for this year.

U.S. industry is healthy, buoyed by a growing world economy and solid spending by American consumers. However, the outlook may be cloudier. The dollar has been rising, which should drive up the price of U.S. products in foreign markets. Manufacturers also face uncertainty surrounding the Trump administration's decision to slap tariffs on imported steel and aluminum.