WASHINGTON -- A large jump in aircraft orders sent U.S. orders for durable goods rocketing 22.6% in July to a new monthly record, Commerce Department data showed Tuesday.
Civilian aircraft orders led by aircraft manufacturer Boeing's (IW 500/13) order book quadrupled from June to $70 billion, driving up the overall total of durable goods orders to $300.1 billion, by far the best month ever.
“Due entirely to a 318% surge in new orders for nondefense aircraft and parts, total new orders for long-lasting durable goods rose by an outsized 22.6% in July,” noted Cliff Waldman, senior economist for the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.
“While good news for an important industry, the backlog from order to production of new aircraft is thought to be around seven years," said Waldman. "Thus, for concerns about the current economy, it is important to consider the data excluding the unusual jump in aircraft demand.
The jump in aircraft orders took the total for all durable goods orders so far this year to 1.70 trillion, a gain of 8.2% over the same seven-month period of 2013.
Leaving out the transport sector, durable goods orders fell 0.8% in the month, dragged down by a slowdown in orders for electrical equipment, appliances, and components, and by defense industry goods.
“The July report was not encouraging for a U.S. economy struggling to shift to faster and more even growth,” Waldman added. “New orders excluding transportation fell by 0.8%, albeit following a strong 3% increase in June. Key supply chain industries experienced weak demand; for example, primary metals and fabricated metals demand had modest declines of 0.3% and 0.4%, respectively. Machinery orders experienced a sharper 1.6% decline.
“More broadly, new orders of nondefense capital goods, excluding aircraft, a well-accepted proxy for business equipment investment, fell by 0.5% in July on the heels of a strong 5.4% increase in June,” he said. “While capital spending has shown short periods of strength, it remains a lagging component of muted U.S. economic performance. In a slow-growth world, with a range of economic and geopolitical uncertainties, equipment investment is unlikely to greatly increase its contribution to U.S. economic growth anytime soon. As a result, U.S. manufacturing output growth will remain moderate.”
Copyright Agence France-Presse, 2014