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The numbers: Orders for long-lasting goods such as autos and airplanes rebounded in May and showed U.S. manufacturers are still expanding rapidly, but widespread shortages of supplies and labor are preventing them from growing even faster.
Orders for durable goods 2.3% last month, the government said Thursday.
The increase fell a bit short of Wall Street’s forecast, but April’s report was stronger than initially reported to help ease any worries.
Economists polled by Dow Jones and The Wall Street Journal had forecast a 2.6% increase.
Bookings had fallen in April for the first time since early in the pandemic, but the decline stemmed from the inability of automakers and other companies to obtain enough supplies to keep their assembly lines going at full blast.
Big picture: The U.S. economy has lots of momentum. Consumers have the desire and money to spend thanks to government stimulus, rising wages and a waning pandemic. And businesses are rushing to add more workers to meet the needs of their customers.
The big holdup is a widespread shortage of labor and materials that’s led to a broad increase in business costs. In many cases companies are trying to pass those costs onto customers and adding to a sharp increase in U.S. inflation.
Read: The U.S. economy is running ‘very hot’, IHS Markit finds, and so is inflation
Until these bottlenecks ease — and it could take awhile — the U.S. economy won’t be able to achieve its full potential. Higher inflation is also acting as headwind.
See: A visual look at how an unfair pandemic has reshaped work and home
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were were set to open higher in Thursday trades.
