US durable goods orders jump in June as defence aircraft orders nearly double
Orders for goods made to last more than three years posted a sharp and unexpected rise last month, albeit mainly on the back of a near doubling in orders for defence aircraft.
According to the Department of Commerce, total durable goods orders jumped at a month-on-month pace of 1.9% in June to reach approximately $272.6bn.
Economists had been expecting a 0.5% drop in total orders.
Excluding orders from the transportation sector on the other hand orders rose by 0.3% on the month, just as anticipated by the consensus.
Defence aircraft and parts orders soared by 80.6% to $9.76bn.
Orders for computers and related products also logged strong growth, growing by 5.9% on the month to reach $1.95bn, while orders in the electrical equipment and appliance space rose by 2.5% to $13.71bn.
Motor vehicles and parts' orders meanwhile grew by 1.5% when compared with May to reach $59.6bn.
Capital goods orders excluding defence and aircraft, a closely-followed lead indicator for business investment, increased by 0.5% to $73.88bn.
"Core capital goods orders rose 0.5%, in line with the recent trend, but probably about flat in real terms. The rate of growth has slowed markedly over the past year, and the summer likely will see a further softening, given the decline in capex spending plans in the regional Fed surveys," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
"In short, this is normal report in the core, but the headline is wild and will reverse, in part at least, in July. The surge in the headline does not change the bigger picture of a slowdown in spending, but it has not reached recession-type proportions. The weakness in ISM manufacturing orders is disconcerting, but the hard data are outperforming. That’s partly because of rising prices for capital equipment, but real spending is doing better too; we hope the gap persists."