US durable goods or­ders up 2 per­cent in July


Or­ders to U.S. fac­to­ries for lon­glast­ing man­u­fac­tured goods rose in July, and de­mand in a key cat­e­gory that tracks busi­ness in­vest­ment plans jumped by the largest amount in 13 months.

The U.S. Com­merce Depart­ment said Wed­nes­day or­ders for durable goods in­creased 2 per­cent in July af­ter a 4.1 per­cent gain in June.

Or­ders in a cat­e­gory that serves as a proxy for busi­ness in­vest­ment ex­panded 2.2 per­cent in July fol­low­ing a 1.4 per­cent rise in June. These or­ders had fallen in four of the pre­vi­ous five months, re­flect­ing the soft patch that man­u­fac­tur­ing has faced this year.

Ian Shep­herd­son, chief economist at Pan­theon Macroe­co­nomics, called the 2.2 per­cent gain in the busi­ness in­vest­ment cat­e­gory “re­ally good news.” He said the strong gain was a solid in­di­ca­tion that the big cut­backs in in­vest­ment spend­ing by oil com­pa­nies were start­ing to ta­per off.

While the July in­crease is en­cour­ag­ing, U. S. man­u­fac­tur­ers still face a host of prob­lems from a stronger dol­lar to fall­ing oil prices and tur­bu­lence in China, the world’s sec­ond big­gest econ­omy.

The higher value of the dol­lar against for­eign cur­ren­cies makes U.S. goods more ex­pen­sive and less com­pet­i­tive in ma­jor ex­port mar­kets. The lower oil prices have led energy com­pa­nies to scale back their in­vest­ment plans.

Mean­while, deep­en­ing con­cerns about China’s econ­omy have sent shock waves through global fi­nan­cial mar­kets in re­cent days, lead­ing to big drops in U.S. stock mar­kets.

The over­all econ­omy, as mea­sured by the gross do­mes­tic prod­uct, grew at an an­nual rate of 0.6 per­cent in the Jan­uary-March quar­ter be­fore re­viv­ing to a growth rate of 2.3 per­cent in the April-June pe­riod.

Many econ­o­mists be­lieve the sec­ond quar­ter fig­ure will be re­vised higher to above 3 per­cent when the gov­ern­ment is­sues its sec­ond look at GDP in the spring on Thurs­day.

The July in­crease in or­ders for durable goods — items ex­pected to last at least three years — was big­ger than econ­o­mists had been fore­cast­ing. They rose even though de­mand for com­mer­cial air­craft fell 6 per­cent dur­ing the month fol­low­ing a 69.7 per­cent surge in June.

Or­ders for ma­chin­ery rose by 1.5 per­cent, and de­mand for com­mu­ni­ca­tions equip­ment in­creased 1.8 per­cent. But or­ders for com­put­ers and pri­mary met­als such as steel both fell.

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