WASHINGTON: Orders for long-lasting US manufactured goods posted their biggest gain on record in July on strong overseas demand for aircraft, and the underlying trend also remained firm, pointing to brisk economic growth.
Durable goods orders, items ranging from toasters to aircraft that are meant to last three years or more, jumped 22.6 percent last month after an upwardly revised 2.7 percent increase in June, the Commerce Department said on Tuesday.
Transportation orders rose a record 74.2 percent as bookings for civilian aircraft more than tripled. Boeing had said earlier it received a record 324 aircraft orders in July.
At the same time, orders for autos logged the biggest gain in five years. Outside of transportation, demand was decidedly softer.
Still, upward revisions to the data for June as well as a pick-up in business investment plans, shipments and order backlogs suggested a strong underpinning for growth.
"This report reinforces the message that manufacturing growth is picking up and is likely to support stronger GDP growth in the second half of the year," said John Ryding, chief economist at RDQ Economics in New York.
US stocks traded higher, with the Dow Jones industrial average reaching an all-time intraday high, with Boeing shares up 0.4 percent. Prices for US Treasury debt rose, while the dollar was flat against a basket of currencies.
Helping bolster investors' spirits, the Conference Board said consumer confidence hit its highest level in nearly seven years in August. A gauge of households' perceptions of the labor market touched its best level since July 2008.
A separate report, however, showed house price growth continued to slow in June. The S&P/Case Shiller's national house price index rose 6.2 percent from a year ago, the smallest gain since November 2012 and down from a 7 percent rise in May.
The housing sector cooled abruptly last year as mortgage rates moved higher, with a lack of supply also crimping sales. Economists think slower price appreciation will help keep the housing recovery on the rails.
STRONG AUTO ORDERS:
Many of the Boeing orders, including 150 planes by the Dubai-based airline Emirates, were for a new version of its top-selling twin-aisle 777 jet, which is still under development and sells for about $377 million at list price.
The aircraft is due for delivery in 2020. It will take at least 10 years for the resulting increase in production from the orders, which also included the Dreamliner jet, to filter through to US gross domestic product.
The report on durable goods orders showed demand for non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.5 percent in July.
But the decline followed an upwardly revised 5.4 percent advance in June and bolstered perceptions that business spending is rising. These core capital goods orders were previously reported to have increased 3.3 percent in June.
Shipments of these goods, which are used to calculate equipment spending in the government's GDP measurement, increased 1.5 percent last month, helping to prompt Morgan Stanley to raise its third-quarter growth estimate by five-tenths of a percentage point to a 3.5 percent annual rate.
Barclays lifted its estimate by 0.3 percentage points to 2.7 percent. Unfilled orders for core capital goods increased 1.1 percent last month after rising 1.7 percent in June, showing a steady pipeline of work that will keep the nation's factories humming.
"There is plenty of gas in the tank for continued growth in business spending," said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, North Carolina.
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