U.S. Durable Goods Orders Post Steep Jump

At 4.9%, it was the largest percent increase since July 2007

New orders for manufactured durable goods jumped by a sharper-than-expected 4.9% in July as the economy showed signs of emerging from recession, the Commerce Department said on August 26.

It was the third increase in the last four months and the largest percent increase since July 2007.

Most analysts had expected a 3.2% increase in July following a 1.3% drop in June amid persistent reports indicating that the world's largest economy was slowly emerging from recession that struck in December 2007.

Durable goods -- those likely to last three years or more, such as autos and appliances, and one measure of business demand -- increased $7.8 billion or 4.9% to $168.4 billion dollars in July.

Excluding transportation, new orders increased 0.8%. Excluding defense, the increase was 4.3%.

Shipments of manufactured durable goods was also up in July for the second consecitive month, increasing by $3.5 billion or 2% to $173.1 billion. It was followed by a 0.7% June increase.

"The July report on durable goods demand squares with recent data in suggesting that the U.S. and global economies have entered a slow, if somewhat uncertain economic recovery," said Cliff Waldman, Economist for the Manufacturers Alliance/MAPI."Excluding the volatile transportation category, total new orders for long-lasting manufactured goods were up less than 1%, continuing a string of modest advances that are now leading to more positive manufacturing production activity as inventories are brought into line with the still weak realities of market demand.

"The mixed industry data for July, with primary and fabricated metals demand showing solidly positive activity but machinery demand suffering a sizable decline, indicates that factory activity will, for a time, likely return to the mixed situation that was indicative of the earlier months of this long recession.

"Disappointingly, new orders for non-defense capital goods, excluding aircraft, a proxy for business equipment spending, slipped a bit after two strong months and remains more than 20% below year-ago levels," he added. "U.S. and global activity has stabilized and financial conditions have improved modestly. But business decision makers are going to have to see firmer and more consistent evidence of a return to the type of economic conditions that will produce solid profits before they are willing to more consistently strengthen their investment commitments and add capacity."

Copyright Agence France-Presse, 2009

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