U.S. Durable Goods Orders Rebound Amid Sharp Jump In Aircraft Demand
25 August 2016 - 7:38PM
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After reporting a steep drop in new orders for U.S. manufactured
durable goods in the previous month, the Commerce Department
released a report on Thursday showing that durable goods orders
rebounded by more than expected in the month of July.
The Commerce Department said durable goods orders surged up by
4.4 percent in July after tumbling by a revised 4.2 percent in
June.
Economists had expected orders to climb by about 3.7 percent
compared to the 4.0 percent slump that had been reported for the
previous month.
The bigger than expected increase in durable goods orders was
partly due to a substantial rebound in orders for transportation
equipment, which shot up by 10.5 percent in July after tumbling by
11.4 percent in June.
Orders for non-defense aircraft and parts soared by 89.9
percent, as aerospace giant Boeing (BA) received orders for 73
planes in July compared to only 12 in June
Excluding the jump in orders for transportation equipment,
durable goods orders rose by 1.5 percent in July after edging down
by 0.3 percent in June. Ex-transportation orders had been expected
to tick up by 0.5 percent.
Orders for computers and electronic products and electrical
equipment, appliances, and components showed significant increases
during the month.
The report also said orders for non-defense capital goods
excluding aircraft, a closely watched indicator of capital
spending, jumped by 1.6 percent in July after rising by 0.5 percent
in June.
However, shipments in the same category, which are used to
calculate GDP, fell by 0.4 percent in July following a 0.5 percent
drop in June.
Andrew Hunter, U.S. Economist at Capital Economics, said,
"Overall, the data suggest that, after contracting at a 3.5%
annualized pace in the second quarter, business equipment
investment may be set for a modest recovery in the third
quarter."
"Admittedly, the latest survey evidence suggests that the upturn
in capital orders might not last for long," he added. "Nonetheless,
now that the drags from mining-related investment and net trade are
fading, we still expect GDP growth to pick up over the second half
of the year."
Next Friday, the Commerce Department is scheduled to release a
separate report on July factory orders, which include orders for
both durable and non-durable goods.
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