Orders of big-ticket manufactured items soared past analysts' expectations to grow by almost 5% in June, fueled once more by buoyant transportation equipment orders, according to U.S. government data released Thursday.
The surge in new orders in June is the fourth consecutive month of increases, indicating strong demand for durable goods despite an aggressive campaign of interest rate hikes by the U.S. Federal Reserve to tame inflation.
On Wednesday, the Fed raised interest rates for an 11th time, and left open the option for more if inflation proved stubborn to bring down to its long-term target of 2%.
Manufactured durable goods orders rose by 4.7% in June from a month earlier to $302.5 billion, the Commerce Department announced in a statement.
The increase was more than triple the median expectation of a 1.5% rise in orders in a MarketWatch survey of economists.
This was largely due to a jump in new orders of transportation equipment, which rose by 12.1%, the Commerce Department said.
"A contraction in the manufacturing sector has been a consistent feature of the US economy over the last year," Andrew Hollenhorst, Citi's chief U.S. economist, wrote in a note to clients after the durable goods data was published.
But he added there are now "growing signs that the manufacturing contraction is easing," and that business equipment investment is picking up.
Durable goods orders increased by a revised 2% in May on the back of higher transportation equipment orders.
Excluding transportation, new orders only increased 0.6%, while new orders excluding defense orders rose by 6.2%, according to the Commerce Department.
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