Durable goods unchanged in May

Demand for US-made durable goods remained flat in May, with higher orders for airplanes and defense goods offsetting weaker sales of machinery and metals, according to Commerce Department figures released today. ┬á Excluding demand for transportation equipment (which rose 2.6 percent), orders for durable goods fell 0.9 percent, the first drop in three months. Defense orders were up 10.9 percent, but after taking them away, total orders fell 0.6 percent. ┬á┬á Metals, machinery and automobiles suffered a fall in demand last month, but those declines were offset by gains in computers, appliances, commercial aircraft and defense equipment. ┬á┬á Manufacturing has nevertheless fared better than in previous downturns. Although the Institute for Supply Management's factory index fell to a five-year low of 48.3 in February, this was well ahead of the 42.1 it sank to in February 2001, a month before the start of the 2001 recession. The index climbed back up to 49.6 last month, close to the dividing line of 50 that separates growth from contraction. ┬á┬á Slower sales and record fuel prices are causing businesses to scale back on hiring and spending. The Federal Reserve is expected later today to leave interest rates unchanged after seven consecutive rate cuts, amid growing concern that increases in food and fuel costs will trigger an inflation spiral.   ┬á┬á┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á