Orders for US durable goods jump 3.4 percent in June

Jul 27, 2015, 5:54 AM

WASHINGTON (AP) — Orders to U.S. factories for big-ticket manufactured goods posted a sizable gain in June, reflecting a surge in demand for commercial aircraft. Meanwhile, a key category that reflects business investment rebounded after two months of declines.

Orders for durable goods jumped 3.4 percent in June from May, when orders had fallen 2.1 percent, the Commerce Department reported Monday. The gain was the best result since March.

A category viewed as a proxy for business investment plans increased 0.9 percent, then best showing since a 1.6 percent rise in March. This category had declined in April and May and had been weak for a number of months. Some economists are hopeful that manufacturing will show stronger gains in coming months as consumers boost spending.

U.S. manufacturers have struggled this year from the effects of a strong dollar and a plunge in energy prices. The higher value of the dollar against foreign currencies makes U.S. goods more expensive and less competitive in major export markets. The big drop in oil prices has led energy companies to cut investment plans.

The overall economy stalled in the January-March quarter, with the gross domestic product shrinking at an annual rate of 0.2 percent. Analysts blamed that weakness on a number of temporary factors including a harsh winter. They expect growth to rebound to around 2.5 percent in the April-June quarter. The government will release its first estimate of GDP growth in the spring on Thursday.

For June, demand for aircraft shot up 66.1 percent, recovering from a 31.6 percent plunge in May. Orders for motor vehicles and parts posted a modest 0.2 percent increase. Overall demand for transportation goods increased 8.9 percent. Excluding this often volatile category, orders were up 0.8 percent in June, the best showing outside of transportation in 10 months.

The 0.9 percent gain for non-defense capital goods orders excluding aircraft, the category used as a proxy for investment, followed a decline of 0.4 percent in May.

Orders for machinery were up 1.4 percent, while demand for computers and related products shot up 9.1 percent.

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Orders for US durable goods jump 3.4 percent in June