U.S. Durable-Goods Orders Rise on Jetliner Demand--2nd Update
28 July 2017 - 3:50AM
Dow Jones News
By Josh Mitchell
WASHINGTON -- Economic reports Thursday offered encouraging
signals about U.S. factories, jobs and underlying demand in the
economy ahead of a much-anticipated report on national output
Friday.
Orders for durable goods -- big-ticket items like refrigerators
and bulldozers -- grew 6.5% in June, the Commerce Department said.
That marked the biggest jump in nearly three years. Separately, the
nation's trade deficit in goods narrowed 3.7% last month as exports
rose sturdily and imports fell, the agency said.
Meanwhile, the Labor Department said jobless claims -- a measure
of layoffs across the U.S. -- have held near four-decade lows,
showing a tight labor market overall despite a rise of 10,000 in
the past week to 244,000.
The data boosted hopes for a strong report from the Commerce
Department Friday on gross domestic product in the second quarter.
Economists polled by The Wall Street Journal project that GDP --
the broadest measure of goods and services made in the U.S. --
expanded at a 2.7% annual pace in April through June.
After Thursday's data, some economists lifted projections to 3%
and above. Such growth would be more than double the first
quarter's 1.4% gain. And it would put the economy in familiar
terrain. In recent years and for various reasons, output has often
risen slowly at the start of the year, rebounded in the spring and
then settled into firm but modest growth in the second half.
"The economy is on a 2% growth path...the same path it's been on
since 2010," said Patrick Newport, economist at IHS Markit. "The
economy is nearing full employment and so we're not going to see
surges in growth because we just don't have the labor force to make
that happen."
Several factors are working in the economy's favor of late.
After two years of turmoil, oil markets have stabilized. That has
pushed energy companies to renew drilling, in turn stoking demand
for equipment and labor.
A booming stock market and rising business confidence also may
have led to a modest pickup in business spending on equipment in
the second quarter. Meanwhile, stronger growth in Europe and Asia
are pushing up demand for U.S. goods. The weakened dollar, which
makes U.S. goods cheaper globally, has also helped exports.
But there are reasons for caution. Thursday's report on durable
goods showed that higher demand last month was largely contained in
one, volatile segment -- aircraft. Sales of civilian aircraft
soared, reflecting better business at aircraft makers such as
Boeing Co. that are benefiting from a rise in global passenger
airline traffic and higher sales of jetliners.
Excluding transportation, orders rose 0.2%. Sales of computers
and cars fell last month, though each are up modestly overall this
year compared with the same period last year.
And while businesses stepped up investment in the second quarter
overall, they retreated at the end of the quarter. Orders for
nondefense capital goods excluding aircraft, a proxy for spending
on equipment and software, fell 0.1% after two months of solid
gains. That marked the first drop since December.
Ben Leubsdorf contributed to this article.
Write to Josh Mitchell at joshua.mitchell@wsj.com
(END) Dow Jones Newswires
July 27, 2017 13:35 ET (17:35 GMT)
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