U.S. Durable Goods Orders Rebound Amid Sharp Jump In Aircraft Demand

(RTTNews) - After reporting a steep drop in new orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report on Thursday showing that durable goods orders rebounded by more than expected in the month of July.

The Commerce Department said durable goods orders surged up by 4.4 percent in July after tumbling by a revised 4.2 percent in June.

Economists had expected orders to climb by about 3.7 percent compared to the 4.0 percent slump that had been reported for the previous month.

The bigger than expected increase in durable goods orders was partly due to a substantial rebound in orders for transportation equipment, which shot up by 10.5 percent in July after tumbling by 11.4 percent in June.

Orders for non-defense aircraft and parts soared by 89.9 percent, as aerospace giant Boeing (BA) received orders for 73 planes in July compared to only 12 in June

Excluding the jump in orders for transportation equipment, durable goods orders rose by 1.5 percent in July after edging down by 0.3 percent in June. Ex-transportation orders had been expected to tick up by 0.5 percent.

Orders for computers and electronic products and electrical equipment, appliances, and components showed significant increases during the month.

The report also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of capital spending, jumped by 1.6 percent in July after rising by 0.5 percent in June.

However, shipments in the same category, which are used to calculate GDP, fell by 0.4 percent in July following a 0.5 percent drop in June.

Andrew Hunter, U.S. Economist at Capital Economics, said, "Overall, the data suggest that, after contracting at a 3.5% annualized pace in the second quarter, business equipment investment may be set for a modest recovery in the third quarter."

"Admittedly, the latest survey evidence suggests that the upturn in capital orders might not last for long," he added. "Nonetheless, now that the drags from mining-related investment and net trade are fading, we still expect GDP growth to pick up over the second half of the year."

Next Friday, the Commerce Department is scheduled to release a separate report on July factory orders, which include orders for both durable and non-durable goods.