Financial News: U.S. Durable Goods Orders Unexpectedly Rebound In August

U.S. Durable Goods Orders Unexpectedly Rebound In August

(RTTNews) - After reporting a sharp pullback by new orders for U.S. manufactured durable goods over the two previous months, the Commerce Department released a report on Thursday unexpectedly showing a significant rebound by durable goods orders in the month of August.

The Commerce Department said durable goods orders shot up by 2.9 percent in August after tumbling by a revised 2.7 percent in July and plummeting by 9.4 percent in June.

Economists had expected durable goods orders to decrease by 0.5 percent compared to the 2.8 percent slump that had been reported for the previous month.

The unexpected surge by durable goods orders largely reflected a substantial rebound by orders for transportation equipment, which spike by 7.9 percent in August after plunging by 9.4 percent in July.

Orders for defense aircraft and parts skyrocketed by 50.1 in August after rising by 0.6 percent in July, while orders for non-defense aircraft and parts soared by 21.6 percent in August after plummeting by 31.5 percent in July.

Excluding the sharp increase in orders for transportation equipment, durable goods orders rose by 0.4 percent in August after jumping by 1.0 percent in July. Ex-transportation orders were expected to come in unchanged.

Notable growth in orders for machinery and fabricated metals products more than offset modest decreases in orders for computers and electronic products and electrical equipment, appliances and components.

The report also said orders for non-defense capital goods excluding aircraft, a key indicator of business spending, climbed by 0.6 percent in August following a 0.8 percent advance in July.

Meanwhile, shipments in the same category, which is the source data for equipment investment in GDP, fell by 0.3 percent in August after rising by 0.6 percent in July.

"The upward surprise in headline and core durable goods orders is further evidence that business equipment investment is holding up well," said Michael Pearce, Deputy Chief U.S. Economist at Oxford Economics.

He added, "Shipments edged down, and provide some downside risk to our Q3 forecast, but the broader picture is that conditions are brightening."

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