Traverse City Record-Eagle

Business

August 27, 2013

Orders for long-lasting U.S. factory goods fall plunge

WASHINGTON (AP) — Orders for long-lasting U.S. factory goods fell sharply last month as demand for commercial aircraft plummeted and businesses spent less on computers and electrical equipment.

Manufacturing continues to struggle and could prevent economic growth from picking up in the July-September quarter.

Orders for durable goods plunged 7.3 percent in July, the Commerce Department said Monday. It’s the steepest drop in nearly a year. Excluding the volatile transportation category, orders fell just 0.6 percent. Both declines followed three straight months of increases.

Durable goods are items meant to last at least three years.

Economists tend to focus on orders for so-called core capital goods. Those orders fell 3.3 percent, but the drop followed four straight months of gains.

Core capital goods are considered a good measure of businesses’ confidence in the economy. They include items that point to expansion — such as machinery, computers and heavy trucks — while excluding volatile orders for aircraft and defense.

The big drop suggests the third quarter is off to a weaker start than some had hoped. While economists cautioned that it’s just one month of data, a few lowered their growth estimates for the July-September quarter after seeing the durable goods report. Economists at Barclays Capital now predict third-quarter growth at an annual rate of 1.9 percent, down from their previous forecast of 2.1 percent.

“At the very least, it is a reminder that the expected pick-up in economic growth in the second half of the year will be gradual,” Paul Ashworth, an economist at Capital Economics, said in an email.

One bright spot was that unfilled orders rose to their highest level since record began in 1992. Those are orders that were placed in previous months but yet to be shipped. The increase suggests output could remain steady in the coming months, despite the weak month of orders in July.

Text Only

the BIZ

AP Video
Arizona Prison Chief: Execution Wasn't Botched Calif. Police Investigate Peacock Shooting Death Raw: Protesters, Soldiers Clash in West Bank Police: Doctor Who Shot Gunman 'Saved Lives' 'Modern Family' Star on Gay Athletes Coming Out MN Twins Debut Beer Vending Machine DA: Pa. Doctor Fired Back at Hospital Gunman Raw: Iowa Police Dash Cam Shows Wild Chase Obama Seeks Limits on US Company Mergers Abroad Large Family to Share NJ Lottery Winnings U.S. Flights to Israel Resume After Ban Lifted Official: Air Algerie Flight 'probably Crashed' TSA Administrator on Politics and Flight Bans Raw: National Guard Helps Battle WA Wildfires Raw: Ukraine's Donetsk Residents Flee Senators Push to End Hamas Threat in Cease-Fire A Young Victim's Premonition, Hug Before MH17 Raw: Deadly Storm Hits Virginia Campground Death Penalty Expert: 'This is a Turning Point' Raw: MH17 Victim's Bodies Arrive in Netherlands
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide