Orders for big-ticket U.S.-manufactured goods were flat in July after four straight monthly increases due to a plunge in the volatile military aircraft category, according to government data released Wednesday.
New orders for durable goods held steady at $273.5 billion, after the nearly 50% drop in demand for defense aircraft and parts -- a segment that surged more than 80% in June, the Commerce Department reported.
The result was far worse than economists had projected, but excluding the defense sector, orders rose 1.2%, the data showed.
Economists say businesses are likely to pull back on investments, fearing Americans will become more cautious about spending amid the highest inflation in 40 years, even though families are buoyed by a stockpile of savings.
Despite high prices and rising interest rates, there were nonetheless signs of continued demand, although some categories hinted at a slowdown, including appliances, which fell, and autos, where orders increased but by much less than in recent months, as did computers and electronics.
Ian Shepherdson of Pantheon Macroeconomics said the data show orders are "holding up" despite business surveys pointing to weaker investment plans.
And while auto orders undershot, "they are trending strongly higher as chip supply improves," he said in an analysis.
"People report to surveys that they are miserable and anxious about the state of the economy, but they keep spending anyway because the huge pile of pandemic savings allows them to cushion the hit to their real incomes from high inflation."
The drop in military aircraft orders was offset by the 14.5% jump in non-defense planes, the report said.
Copyright 2022, Agence France-Presse