US Durable Goods Orders Advanced More Than Forecast in June
Tuesday, July 28, 2020
U.S. orders for durable goods rose more than expected in June, led by a spike in demand for motor vehicles and a pickup in business activity more broadly as states reopened their economies.
Bookings for durable goods -- or goods meant to last at least three years -- increased 7.3% in June, after a downwardly revised 15.1% surge in May, Commerce Department data showed Monday. The median estimate in a Bloomberg survey of economists called for a 6.9% gain in June. Core capital goods orders, a category that excludes aircraft and military hardware, climbed 3.3%, also more than forecast.
The second-straight robust increase in bookings suggest manufacturing is stabilizing, though a full recovery from the pandemic-induced supply chain disruptions, lockdowns and diminished demand will take time. Orders are still significantly below pre-pandemic levels, but so far, spending on goods has experienced a largely V-shaped recovery, unlike the service sector.
Motor vehicle and parts orders jumped 85.7% in June after a 28.8% gain a month earlier. Orders also rose on a monthly basis for metals, machinery, electrical equipment and communications gear.
Stocks were little changed, while the dollar fell and the yield on the 10-year Treasury note declined slightly.
Shipments of core capital goods, a figure economists use to calculate gross domestic product, increased 3.4% in June. Even though that marks a second-straight month of gains, sales are still below their pre-pandemic levels. The first estimate of second-quarter gross domestic product, due on Thursday, is forecast to plummet a stunning 35% on an annualized basis, the steepest decline in records dating back to the 1940s.
Demand for commercial aircraft remains weak, declining sharply in June, according to the government’s report. U.S. planemaker Boeing Co. reported only one order in June. Excluding transportation, durable goods orders rose 3.3%.
Category: Economic News, COVID-19, Business News