November 25, 2020

Durable Goods Orders Drop

WASHINGTON — Orders for long-lasting manufactured goods fell in June and a gauge of business spending plans slipped, reports showed on Wednesday, supporting views that the economy would not emerge quickly from its current soft patch.

The Commerce Department said durable goods orders dropped 2.1 percent in June, weighed down by weak receipts for transportation equipment, after a 1.9 percent increase in May.

Excluding transportation, orders edged up 0.1 percent after gaining 0.7 percent in May. Economists had expected overall orders to rise 0.3 percent.

“It is indicative of the lingering effects of this soft patch that we’ve had here recently, where businesses remain very cautious with regard to building any kind of stocks in anticipation of increasing final sales,” said Mark D. Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

United States Treasury security prices pared earlier losses on the data, while the dollar extended losses against the yen.

Durable goods — from toasters to aircraft — are items that are meant to last three years or more, and they are seen as a leading indicator of manufacturing. Though orders tend to be volatile, the unexpected decline in June could add to fears of a slowdown in factory activity.

Manufacturing has been the bright spot in the economy, which has faltered since the start of the year.

Orders last month were pulled down by an 8.5 percent drop in orders for transportation equipment. That reflected a 28.9 percent plunge in aircraft orders.

Motor vehicle orders dropped 1.4 percent in June as manufacturers continued to deal with disruptions to production following the earthquake in Japan. Motor vehicle orders rose 0.3 percent in May.

Outside of transportation, orders for machinery fell 2.3 percent, while those for primary metals rose 1.0 percent. Capital goods orders fell 4.1 percent, while computers and electronic products edged up.

Nonmilitary capital goods orders excluding aircraft, a closely watched proxy for business spending, slipped 0.4 percent last month, and the May figure was revised upward, to 1.7 percent.

Economists had expected a 0.8 percent gain in June from a previously reported 1.6 percent increase in May.

Article source: http://feeds.nytimes.com/click.phdo?i=4e8dcd27e7e36bd0391184b5fc17540e

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