Orders for U.S. durable goods — items meant to last at least three years — posted a larger-than-expected rise in July, boosted by an increase in demand for passenger aircraft, a Commerce Department report Wednesday showed.
Orders gained 1.7 percent in July, their biggest monthly increase since March. Orders aside from transportation were up a smaller 0.1 percent. June durables orders were revised up, to a 1.1 percent advance from a previously reported 0.9 percent jump.
The July number was well above Wall Street expectations for a 1.0 percent overall gain. But while the number was above forecasts, economists were concerned most of the rise was in one sector.
“Aside from the noise that typically comes from aircraft and defense, the report is consistent with an economy still expanding, but at a slower rate,” said Vincent Boberski, head of fixed income research at RBC Dain Rauscher in Minneapolis.
U.S. Treasury bond prices rallied after the report’s release, as it was not as strong as some traders had feared. The dollar rose against the euro and the yen in foreign exchange markets.
Signs of regaining steam
The U.S. manufacturing sector has shown signs of regaining steam in recent months after being hit hard by the 2001 recession. From January 2001 through July, about 2.7 million U.S. factory jobs have been lost.
Recently, however, the job picture has stabilized and output, driven by a boom in worker productivity, has increased. The Federal Reserve said U.S. factories ran at their fastest operating rate -- 76.3 percent of full capacity -- in more than three years in July.
In the durables report, overall transportation-related orders rose 5.6 percent, as orders in the volatile civilian aircraft category more than doubled from June’s tally, offsetting declines in demand for autos and military aircraft.
U.S. plane manufacturer Boeing Co. said in July it had reached tentative deals with two dozen customers for its planned 7E7 jets. In the second quarter, Boeing said it had delivered 75 commercial airplanes, up from the 74 planes delivered in the same quarter last year.
But other sectors aside from aircraft also showed strength. Orders for primary metals were up 5.8 percent while orders for machinery grew 2.1 percent. Durables orders excluding defense-related goods were up 2.7 percent.
Orders for civilian capital goods aside from aircraft --considered by some as a gauge of business investment in new plants and equipment -- were up 0.6 percent after being up 1.4 percent in June.