Durable goods orders plunge 6.8% — biggest drop since August ’14

Orders for WASHINGTON — long-lasting manufactured goods sank 6.8 percent in July, the biggest fall in nearly three years, led by a drop in the volatile category of civilian aircraft. But a gauge of business investment rose last month.

The Commerce Department said Friday that orders for durable goods — items meant to last at least three years — reversed a sharp gain in such orders in June.

The numbers were warped by a 19 percent drop in orders for transportation equipment, a category that bounces wildly from month to month. Specifically, orders for civilian aircraft tumbled 70.7 percent in July — payback for a 129.3 percent surge in June.

Excluding transportation, orders rose a solid 0.5 percent last month.

Economists had expected orders to drop after the big gain in June. Overall, American industry continues to look mostly solid. Manufacturers have rebounded from a slump in late 2015 and early 2016 caused by cutbacks in the energy industry and a strong dollar that makes U.S. goods costlier overseas.

Spending on durable goods accounts for a small part of American economic output. But changes in durable goods orders often signal where the economy is headed, so the report is closely watched.

The category that’s seen as a harbinger of future business investment — orders for capital goods excluding defense equipment and aircraft — expanded 0.4 percent in July.

STEVE HELBER / AP Trucks are lined up in front of a Chevrolet dealership in Richmond, Va., recently. On Friday, the Commerce Department released its July report on durable goods, a closely watched economic indicator.