Orders for US durable goods rebounded in July

By Martin Crutsinger, The Associated Press

WASHINGTON – Orders to U.S. factories for big-ticket manufactured goods surged in July, lifted in part by the biggest increase in orders in a key investment category since January.

Orders for durable goods jumped 4.4 per cent in July, rebounding from a 4.2 per cent plunge in June, the Commerce Department reported Thursday. The changes in both months were driven by swings in the volatile category of commercial aircraft.

An important category that serves as a proxy for business investment rose 1.6 per cent in July, up from a 0.5 per cent rise in June. It was the best showing in this category in six months. The result could be a sign that business investment is starting to rebound following the big cutbacks earlier this year. The upswing in June and July followed decreases in both March and April.

American manufacturers have struggled this year with a strong dollar, which has hurt exports and a drop in investment spending in the energy sector, reflecting falling oil prices.

Orders for commercial aircraft surged 89.9 per cent in July after a plunge of 59.7 per cent in June. Excluding the volatile transportation category, orders rose 1.5 per cent in July, the best showing since January.

Demand for primary metals such as steel rose 1.4 per cent while orders for machinery rose 1.6 per cent and demand for computers jumped 10.3 per cent.

Economists saw the rise in the investment category as a tentative sign that this sector might be seeing signs of recovery, which could bolster overall economic growth in the second half of this year.

Sal Guatieri, senior economist at BMO Capital Markets, said he believed a modest rebound in investment spending would help boost gross domestic product growth to around 3.8 per cent in the current July-September, up from the anemic 1.2 per cent growth rate in the April-June quarter.

He said that the rebound in financial markets following the turbulence caused by the June 23 vote in Britain to leave the European Union should reduce business uncertainty, “giving managers more confidence to expand their business.”

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