Demand for long-lasting factory goods plunged in July, but a sharp drop in aircraft orders masked underlying signs of strength.
Orders for durable goods--products designed to last at least three years, such as trucks and washing machines--decreased 6.8% from the prior month to a seasonally adjusted $229.16 billion in July, the U.S. Commerce Department said Friday.
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Economists surveyed by The Wall Street Journal had expected a 6.0% decline for orders last month. In June, headline orders were up 6.4%.
The decline was the largest monthly decrease in nearly three years, but it entirely reflected volatility in aircraft demand. Outside of transportation, orders rose for the third straight month in July.
Last month, orders for transportation equipment declined 19.0%, which included a 70.7% drop in orders for nondefense aircraft and parts. Aircraft orders were up 129.3% the prior month. Excluding transportation, orders grew 0.5% in July, a strengthening from June.
A closely watched proxy for business spending on new equipment, new orders for nondefense capital goods excluding aircraft, rose 0.4% in July.
Data can be volatile from month to month, but the broader trend shows gradual growth this year. Total durable-goods orders were up 5.0% in the first seven months of 2017 compared with the same period a year earlier.
A strengthening global economy and U.S. energy sector help bolster demand for U.S. manufactured goods. Manufacturing data has recently signaled a positive growth trajectory for the overall economy. U.S. factory activity expanded for the 11th consecutive month in July, according to the Institute for Supply Management.
The Commerce Department's durable-goods report can be accessed at: https://www.census.gov/manufacturing/m3
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(END) Dow Jones Newswires
August 25, 2017 08:45 ET (12:45 GMT)