The Economy

Orders For Durable Goods Get a Lift

Capital goods orders for June beat expectations, rebounding strongly after dropping the past two months.
Katie Kuehner-HebertJuly 27, 2015
Orders For Durable Goods Get a Lift

New orders for manufactured durable goods in June increased 3.4%, to $235.3 billion, the Commerce Department reported Monday. The rise followed a 2.1% drop in May.

Transportation equipment led the increase, rising 8.9% in June, to $78.4 billion, after two consecutive monthly decreases. Spiking that category was a 66% increase in new orders for commercial aircraft, to $17.2 billion, and a 16.9% increase in new orders for defense aircraft, to $4.7 billion.

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durable goodsAn Associated Press story on Monday said the jump was driven by aircraft orders booked by Boeing at the Paris air show.

The category viewed as a proxy for business investment plans — nondefense capital goods excluding aircraft — rose a slower 0.9% in June.

While this was the strongest showing since March, it followed two months of declines, including a 0.4% drop in May. Through the first six months of 2015, demand for nondefense capital goods excluding aircraft is running 3.4% below the same period a year ago.

“U.S. manufacturers have struggled this year from the effects of a strong dollar and a plunge in energy prices,” the AP wrote. “The higher value of the dollar against foreign currencies makes U.S. goods more expensive and less competitive in major export markets, while the lower oil prices have led energy companies to scale back investment plans.”

BMO Capital Markets senior economist Jennifer Lee described the June results as a “glimmer of hope” that may point to “stronger business investment as the second half begins.”

Other analysts are worried the Greek debt crisis, the highly unstable Chinese stock market, and other global problems weighing on the U.S. economy will damper export sales.