Excluding transportation, orders rise for third month in a row
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) - A doubling in aircraft bookings in July drove orders for new U.S.-made durable goods up by 4.9%, the largest increase in two years, the Commerce Department reported Wednesday.
Excluding the 18.4% increase in transportation goods, orders rose 0.8%, the third straight gain and the longest upward streak in four years.
Orders for durable goods - which are expensive manufactured goods designed to last three years or more - had fallen 1.3% in June. Orders are down 26% in the first seven months of 2009 compared with the same period last year.
Economists surveyed by MarketWatch were looking for a 4% gain in durable-goods orders in July.
Shipments for durable goods rose 2% in July after a 0.7% increase in June. Inventories fell 0.8%, a sign that manufacturers are getting their once-bloated inventories back in line with demand, which should boost economic growth in the second half of the year.
The strong gain in orders and shipments in July is consistent with other evidence pointing to a revival of manufacturing output following the steepest drop in 60 years earlier in the year. Some economists fear, however, that output could sink again later in the year if domestic demand doesn't improve.
Higher export demand and restocking inventories isn't enough to create sustainable growth in manufacturing.
The increase in durable-goods orders in July was concentrated in transportation, but gains were seen as well in most other industrial sectors, including electronics, electrical equipment, and metals. Orders for machinery fell sharply.
Orders for nondefense, nonaircraft capital goods fell 0.3% in July after hefty gains in May and June. Shipments of core capital equipment - the best monthly gauge of business investment - rose 0.5%.
Details
Orders for transportation goods rose 18.4%, including a 107% gain in civilian aircraft. Orders for motor vehicles and parts increased 0.9%.
Orders for machinery fell 6.6%.
Orders for electronics excluding semiconductors rose 1.6%, despite a 2.8% drop in computers.
Orders for electrical equipment rose 5.3%.
Orders for primary metals rose 2.6%. Orders for fabricated metals rose 2.8%.
