US durable goods orders surge in July
New orders for long-lasting US manufactured goods surged in July on strong demand for transportation equipment, government data has shown – but a gauge of US business spending has fallen.
Durable goods orders jumped four per cent after a 1.3 per cent drop in June, the US Commerce Department said. Economists had expected orders to rise two per cent last month.
Though durable goods orders are extremely volatile, the data eased fears the economy was slipping back into recession, after a raft of weak sentiment surveys.
“It’s consistent with the idea of positive growth but not especially strong. The underlying trend is certainly good,” said Scott Brown, chief economist at Raymond James in St. Petersburg in Florida.
Prices for US Treasury debt fell on the data, while stock index futures turned positive. The dollar extended losses against the euro.
Orders last month were buoyed by a 14.6 per cent jump in bookings for transportation equipment, which was the largest increase since January.
Excluding transportation, orders rose 0.7 per cent after gaining 0.6 per cent in June and confounding economists’ expectations for a 0.5 per cent fall.
But non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.5 per cent last month after a revised 0.6 per cent rise in June.
Economists had expected a one per cent fall from a previously reported 0.4 per cent gain.
The decline in business spending plans, coming on the heels of weak readings from regional factory surveys so far this month, could add to fears that the manufacturing sector is running out of steam.
However, this business spending plans category normally weakens in the first month of each quarter in part because of an incomplete seasonal adjustment of the power equipment subcomponent.
Manufacturing has supported the economy’s recovery. However, a plunge in share prices has hit both business and consumer confidence. Regional Federal Reserve factory surveys so far for August have been sharply weaker.