U.S. durable goods orders came in weaker than expected for April, dropping 2.4% to US$168.9 billion, the largest monthly decline since last September, the U.S. Commerce Department said Wednesday. The market expected just a 1% slide.

The drop followed a revised 1.4% rise in March orders, which were previously estimated as a 1.5% increase.

“This news confirms the weakness seen in the ISM orders survey and underscores the soft industrial production and factory hours worked reports reported earlier. U.S. manufacturing had a bad month in April,” says BMO Nesbitt Burns. “The decline more than offset the encouraging 1.4% rise in March. Moreover, orders for capital goods ex aircraft, a key indicator of business spending, fell 3%.”

“Although unimpressive, the April numbers are likely still tainted with some war-related residue,” cautions RBC Financial. “With attractive financing rates and a generally simulative environment, this report is likely to show some improvements going forward.”

“Given Greenspan’s suggestion that we have to wait a number of weeks before clean data emerge, we suppose one could argue that these figures are too tainted to matter much,” BMO allows. “However, orders are forward-looking. So, it makes sense to wonder where a May/June factory pickup will come from if bookings for new production are not firming ahead of that time. Longer term, we anticipate orders will benefit from the big decline of the dollar.”

“This is another report that leans on the side of the Fed making an insurance rate cut in June. By itself, it does not carry much weight. But together with other information suggesting the economy remains on the soft side, it is supportive for bonds.”