Durable-Goods Orders Rose 11.2% in July

New orders for products designed to last at least three years rose in July for the third consecutive month. Above, furniture on display at a department store in New York.

Photo: Jeenah Moon/Bloomberg News

Orders for long-lasting factory goods rose for a third straight month in July as manufacturers boosted output and the economy continued its climb back from disruptions related to the coronavirus pandemic.

New orders for durable goods—products designed to last at least three years—increased 11.2% in July from the previous month, the Commerce Department reported Wednesday.

Orders for military aircraft and motor vehicles led the gains, pushing new orders for transportation equipment up 35.6% from a month earlier. Excluding the often volatile transportation category, orders rose a more moderate 2.4%.

A closely watched gauge of business investment—new orders for nondefense capital goods excluding aircraft—increased 1.9% from the prior month and was barely shy of February levels.

“The recovery in business equipment investment looks pretty V-shaped to us,” said Michael Pearce, senior U.S. economist at Capital Economics.

U.S. factories were hit by health concerns, supply chain disruptions and shutdowns early in the coronavirus crisis. But efforts to reopen the economy have helped manufacturers regain much of the ground lost in March and April.

That has been reflected in a variety of measures. As of July, manufacturing employment was down less than 6% from its 2020 peak in February. Employment in service-providing industries, in comparison, was down almost 9%.

And momentum appears to be continuing. Data firm IHS Markit’s survey of purchasing managers at U.S. factories showed August activity expanding at the fastest pace since the start of 2019.

Output growth has been especially strong in the auto sector as factories ramp up output and sales begin to recover from the worst stretch of the pandemic. New orders for motor vehicles and parts increased 21.9% last month, surpassing pre-pandemic levels.

While investment has made up significant ground, some economists are cautious about the outlook.

“It is our hunch that…the trend of growth will be slower than it would have been otherwise,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez. “To be honest, though, it is still anyone’s guess, and is largely going to depend on the path of the virus, the ability to distribute a safe and effective vaccine, and fiscal policy developments.”

More on the Economy

  • Durable-Goods Orders Rose 11.2% in July August 26, 2020
  • Historic Contraction in Rich Economies Presages Long Climb Back August 26, 2020
  • Home Sales Reach Lofty Heights August 21, 2020
  • U.S. Jobless Claims Rose to 1.1 Million in Latest Week August 20, 2020

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