Aircraft Boost U.S. Durable Goods Orders

Aug. 24, 2011
Commercial aircraft orders soared 43.4%.

New orders for U.S. durable goods rebounded sharply in July from a June dip, boosted by a surge in aircraft orders, official data showed on August 24.

Orders for durable goods, manufactured items expected to last several years, leaped 4%, more than wiping out a 1.3% decline in June, the Commerce Department said.

The increase was the second in the past three months, and provided a positive break from a recent series of weak manufacturing indicators.

The July gain was led by a 14.6% increase in orders for transportation equipment, which can be volatile month-to-month. Commercial aircraft orders soared 43.4%.

Excluding transportation, new orders rose 0.7%.

"The auto parts supply chain has ramped back up from the March 2011 Japanese tsunami, and foreign and domestic nameplate manufacturers have increased their production schedules,"said Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI. "For example, motor vehicle and parts new orders grew 11.5% in July. Outside the transportation sector, orders for primary metals surged (reflecting the motor vehicle orders), but orders in most other capital goods industries declined.

"Non defense capital goods orders excluding aircraft, a good proxy for equipment activity in the economy, declined 1.5% in July," he added. "Fortunately, nondefense capital goods orders excluding aircraft are up 11.8% year-to-date in 2011 compared to last year. The statistics show that capital equipment purchases are inherently choppy and experience spurts and setbacks. Nevertheless, business equipment spending is growing much faster than the general economy and is contributing to a rebalancing of the U.S. economy toward more investment and exports as a driver of growth and less dependency on consumer spending and housing."

Copyright Agence France-Presse, 2011

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