US durable goods orders rise boosted by aircraft
US orders for long-lasting manufactured goods rose for the second consecutive month in July, however weaker shipments of non-defence capital goods signalled the outlook for the industrial sector remains uncertain amid the ongoing trade war.
Durable goods orders rose 2.1 per cent in July, the Commerce Department said on Monday. That marked the biggest monthly increase since March and exceeded expectations for a more modest 1.2 per cent increase, according to economists surveyed by Thomson Reuters.
“The headline was boosted by a rebound in orders for Boeing aircraft, but core orders remains sluggish,” said Ian Shepherdson economist at Pantheon Macroeconomics.
The report also showed that new orders for non-defence capital goods excluding aircraft, considered a proxy for business investment, unexpectedly rose 0.4 per cent month-on-month compared to expectations for a 0.1 per cent decline.
However, shipments of non-defence capital goods ex-aircraft fell 0.7 per cent, following a downwardly revised 0.9 per cent increase in June (previously 1.5 per cent).
“Capital goods orders continue to outperform relative to the ISM [manufacturing] survey, suggesting that non-manufacturing firms are more willing to spend than their industrial counterparts, but it’s far from clear that this can persist in an environment of such uncertainty over tariffs, especially on consumer goods,” Mr Shepherdson added.
The data come after a gauge of manufacturing contracted for the first time since 2009 amid concerns about a slowdown in global growth and uncertainty around the trade war.
Federal Reserve chair Jay Powell on Friday delivered his most powerful warning of the risks to the US economy from the US-China trade war and cautioned that fitting trade uncertainty into the cental bank’s policy framework was “a new challenge”.