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July U.S. Durable Goods Orders Increase Impressively

By John S. McClenahen Led by new orders for aircraft and machinery, new orders for U.S. manufactured durable goods -- not including semiconductors -- increased an unexpectedly strong 8.7% to $179.7 billion in July, says the U.S. Commerce Department. The percentage increase was the largest for durables since October 2001. In June of this year, new orders for durables fell 4.5%, and most economists were anticipating only about a 1.5% increase in July. Non-defense durables are perhaps the best measure of just how remarkably strong July's performance was. Those orders increased a stunning 7.3%, the largest monthly increase on record. Thomas J. Duesterberg, president and CEO of Manufacturers Alliance/MAPI, an Arlington, Va.-based business policy research group, terms the July durables report "good news for manufacturers." He notes that inventories remain low, "setting the stage for strong growth as demand rebounds and companies restock their shelves." Says Maury Harris, chief economist at New York-based UBS Warburg LLC, "The revival is inconsistent with the double-dip theory [of recession] and should reaffirm the Fed's conviction that for now it has [monetary] policy just right." The Commerce Department no longer includes semiconductors in its monthly data on durable orders, shipments and inventories because several large semiconductor makers have stopped providing it with their numbers.

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