Durable Goods Orders Decline More than Expected in July

Durable Goods Orders Decline More than Expected in July

Boeing has reported on its website that it received only 22 aircraft orders in July, sharply down from 184 in the prior month.

Overall, shipments of manufactured durable goods in July, which have been up three consecutive months, increased $1.0 billion or 0.4% to $237.4 billion.

But there's a wrinkle in the July report that runs counter to that rule.

Orders for long-lasting manufactured goods sank 6.8 percent in July, the biggest fall in almost three years, led by a drop in the volatile category of civilian aircraft.

Durable goods are pricey items created to last for several years, so growth signals enough confidence in the economy to make such investments. Specifically, orders for civilian aircraft tumbled 70.7 percent in July - payback for a 129.3 percent surge in June. Businesses tend to make big investments in those items when they feel confident about the economy.


In addition, core capital goods orders, which economists watch as a proxy for business spending plans, increased 0.4% last month after being unchanged in June.

"As this rebound in capital spending appears sustained, we are forecasting another mid-single-digit advance in business investment in the third quarter", NatWest economists said in a note to clients.

Orders for motor vehicles and parts dropped 1.2% in July, the biggest decline since May 2016, after decreasing 0.7% in June.

The Commerce Department said orders for durable goods - items meant to last at least three years - reversed a sharp gain in such orders in June.

Shipments in the same category, which are used to calculate GDP, climbed by 1.0% in July following a 0.6% increase in the previous month. Economists had expected durable goods orders to slump by 6.0 percent. It was the largest monthly decrease in almost three years, but that was entirely a reflection of lumpy aerospace orders.

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