Durables Orders Up; New Homes Down

By John S. McClenahen New orders for manufactured durable goods, generally big-ticket items designed to last three or more years, rose again in July. According to U.S. Commerce Department data released Aug. 25, last month orders rose 1.7% to $195.6 billion, significantly above the consensus forecast for a 1% increase. June's increase was revised upward to 1.1%. Primary metals, machinery, communications equipment, electrical equipment appliances and components, and nondefense aircraft and parts all posted gains in July. Merrill Lynch & Co., New York, notes Boeing Co.'s orders surged in July, with the Chicago-based aerospace firm reporting 75 new plane orders, up from 14 in June. Still, Merrill senior economist Kathy Bostjancic characterizes July durables as a disappointment. Excluding transportation, "orders were up just 0.1%," she stresses. "We have been looking for a bounce in capex [capital expenditures] in [the fourth quarter] ahead of the expiry of the corporate tax credit at yearend. But . . . rising inventories and softening orders demand signals that the [fourth-quarter] rise could be weaker than forecast." Meanwhile, sales of single-family new homes in July fell 6.4% to a seasonally adjusted annual rate of 1.134 million in July, the Commerce Department and the U.S. Department of Housing and Urban Development jointly reported on Aug. 25. The decline was greater than the 2% economists generally expected. The median sales price on new houses sold in July was $207,400, and the average price was $274,200. There was a 4.2-month supply of new homes available at the end of July.

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