Reflecting a sharp increase in orders for transportation equipment, the Commerce Department released a report on Wednesday showing an unexpected surge in new orders for U.S. manufactured durable goods in the month of June.
The Commerce Department said durable goods orders shot up by 1.9 percent in June after climbing by 0.8 percent in May. The continued increase surprised economists, who had expected durable goods orders to dip by 0.4 percent.
The unexpected jump in durable goods orders came as orders for transportation equipment soared by 5.1 percent in June after leaping by 1.5 percent in May. Orders for defense aircraft and parts helped lead the way higher, skyrocketing by 80.6 percent.
Excluding the spike in orders for transportation equipment, durable goods orders rose by 0.3 percent in June following a 0.5 percent increase in May. Economists had expected ex-transportation orders to edge up by 0.2 percent.
The uptick in ex-transportation orders came as notable increases in orders for electrical equipment, appliances, and components and computers and electronic products were partly offset by a pullback in orders for primary metals.
The report also showed orders for non-defense capital goods excluding aircraft, a key indicator of business spending, rose by 0.5 percent for the second consecutive month.
Shipments in the same category, which is the source data for equipment investment in GDP, advanced by 0.7 percent in June after jumping 1.0 percent in May.
“Looking ahead, challenges from softer consumer goods demand, soaring inflation, higher interest rates, and rising recession fears will lead to slower manufacturing activity,” said Lydia Boussour, Lead U.S. Economist at Oxford Economics.
She added, “Tighter financial conditions will make capital expenditures projects more expensive, but higher interest rates in line with what we’re forecasting won’t completely derail business investment prospects.”
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