WASHINGTON (AP) — Business orders for long-lasting manufactured goods shot up by the largest amount on record in July. But most of the strength came from demand for commercial aircraft, which tends to fluctuate sharply from month to month. Outside of transportation, orders dipped.
Despite the broader weakness in July, most analysts said factory output will likely support solid economic growth in the second half of this year as companies increase their orders for the equipment they need to meet rising demand.
Paul Dales, senior U.S. economist at Capital Economics, noted that some manufacturers are starting to run out of production capacity and that loans to businesses are up sharply.
"We suspect that investment will prove to be one of the economy's bright spots in the second half of this year," Dales wrote in a research note.
Orders for durable goods in July rose 22.6 percent on a seasonally adjusted basis, the Commerce Department said Tuesday. The strength came from a 318 percent increase in orders for civilian aircraft, which helped lift orders for transportation equipment by a record 74.2 percent.
Excluding transportation, orders fell 0.8 percent. And a key category that serves as a proxy for business investment plans dropped 0.5 percent. Still, that followed a sizable 5.4 percent rise in the previous month.
After going into reverse during the first three months of the year, mainly because of the severe winter, the U.S. economy rebounded in the April-June quarter: It grew at a solid annual rate of 4 percent as measured by the gross domestic product, the economy's total output of goods and services.
The jump in commercial aircraft orders reflected a good month for Boeing, which reported 324 orders for new aircraft in July, up from 109 orders in June. And this week, the company said it received an $8.8 billion order from an aircraft leasing company based in Singapore.
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