WASHINGTON (AP) -- Orders to U.S. factories for big-ticket
manufactured goods surged in July, rising 3.3 percent, with gains
posted for everything from industrial machinery and electronics to
The Commerce Department reported today that orders for durable
goods -- items expected to last at least three years -- rose last
month to a seasonally adjusted $204 billion.
The 3.3 percent increase was the biggest gain since December
1998, when orders rose 3.4 percent.
The inflation-sensitive bond market gained ground after the
figures were released, pushing down yields on 30-year Treasury
bonds to 5.91 percent in early trading from 5.93 percent late
Tuesday. Stocks moved upward slowly.
The increase in durable-goods orders followed a 0.5 percent gain
in June, better than what the government previously estimated, and
a 1 percent gain in May.
July's performance was much better than many analysts had
expected. They were forecasting a rise of 0.8 percent in July.
The strong report comes one day after the Federal Reserve bumped
up interest rates for the second time this year in an effort to
cool the economy and prevent an outbreak of inflation.
Orders for industrial machinery, the category that includes
computers and machine tools, had the strongest showing in July,
rising a hefty 8.4 percent, the largest increase since January
1995. That followed sharp declines of 4.5 percent and 3.9 percent
in May and June respectively.
And, orders for electronic and other electrical equipment, which
includes everything from semiconductors, circuit boards and
telecommunications equipment to home appliances, posted a strong
5.9 percent gain in July, following a 3.5 percent increase in June
and a 0.9 percent drop in May. July's showing for this category was
the biggest gain since December 1998, the department said.
Orders for transportation equipment also rose 2 percent in July,
following gains of 1.1 percent in June and 9.9 percent in May. The
transportation sector is often volatile from month to month because
it includes such big-ticket purchases as airplanes.
The Commerce Department said an increase in orders for airplane
and aircraft parts more than offset a decline in orders for
automobile and car parts. The summer is traditionally a slow period
for the automobile industry as manufacturers retool assembly lines
to prepare for new models. Still, the auto industry expects record
sales this year.
Excluding transportation, overall orders for durable goods would
have risen 3.7 percent, the largest increase since February 1997.
American manufacturers have been battered by a global financial
crisis, which has cut sharply into their overseas sales and also
opened them up to stiffer competition from cheaper imports.
Still, the overall economy has continued to do exceptionally
well, powered by strong consumer demand.
One of the U.S. industries that has suffered the most from the
global turmoil has been steel. But today's report indicated that
the industry may have put the worse behind it.
Primary metals, the category that includes steel, saw orders
grow by a solid 2.4 percent in July, following gains of 2.7 percent
in June and 0.3 percent in May.
And, shipments of big-ticket durable goods, a good sign of
current demand, rose a solid 0.7 percent in July.