U.S. Durable Goods Orders Rose in July

WASHINGTON — Orders for aircraft and autos last month drove up demand in July for long-lasting manufactured goods, the government said Wednesday. Outside of those categories, businesses invested less in factory goods. The Commerce Department reported that overall orders for durable goods rose 4 percent last month, the biggest increase since March. Demand for autos and auto parts jumped 11.5 percent, the most in eight years. Aircraft orders, a volatile category, soared 43.4 percent, after falling 24 percent in June.

Excluding transportation goods, orders rose just 0.7 percent.

Trading on Wall Street was mixed at the start of Wednesday’s session after the Commerce Department report was announced but then turned sharply positive.

A critical category that tracks business investment plans fell 1.5 percent, the biggest drop in six months. That suggests businesses are pulling back on spending. Orders in all other major categories dropped, including computers, electronic goods and machinery.

A durable good is a product that is expected to last at least three years.

Auto production is rebounding after a slowdown caused by the Japan earthquake. The Federal Reserve reported last week that factory output rose 0.6 percent in July, mostly because of an increase in auto production.

A big order by American Airlines helped raise the aircraft sector. American Airlines ordered 100 new Boeing 737 planes with fuel-efficient engines in July.

Manufacturing has been a key source of economic growth since the recession officially ended in June 2009. But it began to slump this spring, along with the broader economy.

Orders fell in April and June, partly because of supply disruptions stemming from the March 11 earthquake in Japan. And a spike in gas prices earlier this year cut into consumer spending, reducing demand for big-ticket items, like computers, appliances and furniture.

Several recent reports suggest the sector could be slowing further. A survey by the Federal Reserve Bank of Philadelphia showed that manufacturing in the mid-Atlantic region contracted in August by the most in more than two years. A Richmond Fed survey released Tuesday and a New York Fed survey last week also pointed to slowdowns in those areas, although not as severe as the Philadelphia region.

Economists predicted further weakness, even as temporary factors fade. Falling stock prices and fear of another recession may persuade consumers and businesses to hold back on big purchases. That could slow orders for industrial machinery, electronic goods and appliances.

Article source: http://www.nytimes.com/2011/08/25/business/economy/durable-goods-orders-rose-in-july.html?partner=rss&emc=rss