DURABLE goods orders in the US fell through the floor in July, dropping by 7.3 per cent from June, with transport, computers and electrical equipment all seeing declines.
The figures for long-lasting manufactured items announced yesterday were much worse than expected. Analysts had projected a three per cent fall, but the drop was the most severe since August last year.
Orders are often used as a signal of business investment, with a poor showing suggesting that the third quarter will see little upturn.
Aviation was hit particularly hard, as Boeing received less than a third of the orders in July that it did in June, contributing towards a reduction orders across the sector of 52.3 per cent. Orders excluding transportation fell by 0.6 per cent between June and July.
Paul Ashworth of Capital Economics said that previous surveys had indicated a much rosier picture of the US economy. He added: “It is a reminder that the expected pick-up in economic growth in the second half of the year will be gradual”.
Deutsche Bank’s Joseph LaVorgna agreed: “While todays report was decidely disappointing, it is too early to alter our three per cent growth target for the second half of the year”.