Durable-goods orders decline 2%
Indicator of business investment edges lower in August
WASHINGTON — Orders for long-lasting U.S. manufactured goods dropped in August with weakness in a key category that tracks business investment plans.
Orders for durable goods fell 2 percent last month in contrast to July when orders rose by 1.9 percent, the Commerce Department reported Thursday. A key category that serves as a proxy for business investment edged down 0.2 percent last month after gains of 2.1 percent in July and 1.5 percent in June.
“The net of the last couple months is still up a little bit, and it does look like both capital-goods orders and shipments are on track for a gain in the third quarter,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, N.Y.
Still, “when you look at the U.S. economy right now, the export-oriented manufacturing sector does look quite weak,” he said.
The underlying demand for manufactured goods has been weaker this year as a strong dollar and China’s economic slowdown have dragged down demand for American exports, and big declines in oil prices have resulted in cutbacks in investment by energy companies.
Still, economists said the 2 percent August decline overstated the weakness in manufacturing because much of the drag last month came from a 19.3 percent fall in orders for defense equipment, a volatile category. Excluding defense, orders would have dropped a smaller 1 percent in August.
Paul Ashworth, chief U.S. economist for Capital Economics, said the 0.2 percent
setback in the business-investment category had been expected given the strong gains in this area in the previous two months.
“Investment in equipment appears to be recovering in the third quarter,” Ashworth said in a research note.
For August, demand for commercial aircraft fell for a
second month, dropping 5.9 percent after an 8.7 percent decline in July. In June, this volatile category had shown a 69.9 percent increase.
Orders for motor vehicles and parts fell 1.6 percent after gains in the two previous months.
Orders outside of the transportation categories were flat in August after a modest 0.4 percent rise in July.
Demand for machinery was up 1 percent, but orders
for computers fell 5.7 percent.
The number of Americans seeking unemployment benefits rose slightly last week yet remained at a low level consistent with solid job growth.
Weekly applications for jobless aid rose 3,000 to a seasonally adjusted 267,000, the Labor Department said Thursday. The four-week average, a less volatile figure, declined to 271,750.
Applications are a proxy for layoffs, and the low readings
suggest Americans are enjoying solid job security. Steady economic growth has encouraged employers to hold on to the workers they already have and is spurring more hiring. The four-week average fell to a 15-year low last month.
The steady stream of low readings also indicates that employers have not been spooked by signs of slowing growth in China or recent volatility in the stock market.
“Overall employment growth remains more than strong enough to keep the unemployment rate declining,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said in a note to clients. “Domestic strength is offsetting foreign weakness.”
The number of people receiving benefits was essentially unchanged at 2.24 million.
Employers have added an average of 221,000 jobs
a month in the past three months, a solid pace and above the average of 189,000 in the preceding three months. The U.S. unemployment rate in August fell to 5.1 percent, a seven-year low. The unemployment rate in Arkansas dropped to 5.4 percent last month
Information for this article was contributed by Martin Crutsinger and Christopher S. Rugaber of The Associated Press and by Victoria Stilwell of Bloomberg News.