WASHINGTON- Orders for long-lasting US manufactured goods rose in August as an increase in machinery and other products offset a drop in civilian aircraft, and business spending on equipment appeared to regain momentum after faltering early in the third quarter.
The report from the Commerce Department on Wednesday also showed shipments of capital goods rebounding sharply last month, a sign of resilience in both business investment and the overall economy despite the Federal Reserve’s aggressive monetary policy tightening. The surge in shipments compensated for downward revisions to July’s data, prompting some economists to raise their gross domestic product growth estimates for this quarter.
But others viewed the rise in the value of orders and shipments as having been flattered by higher prices as inflation picked up in August.
“While inflation and downward revisions to July data give a reality check to the report, strength everywhere else in the economy suggests third-quarter growth is on solid footing regardless of tepid equipment spending,” said Will Compernolle, macro strategist at FHN Financial in New York.
“If nothing else, the resilience of business investment is one more reason the Fed can be cautiously optimistic that its rapid rate hikes have not tipped the economy into a recession.”
Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, gained 0.2 percent last month. Data for July was revised lower to show orders for these goods decreasing 5.6 percent instead of 5.2 percent as previously reported.
Economists polled by Reuters had forecast durable goods orders falling 0.5 percent last month. Orders increased 4.2 percent year-on-year in August. Machinery orders rose a solid 0.5 percent , while bookings for electrical equipment, appliances and components jumped 1.1 percent . Orders for computers and electronic products gained 0.3 percent . Demand for fabricated metal products increased 0.5 percent .
But orders for primary metals fell 0.6 percent . Transportation equipment orders slipped 0.2 percent , weighed down by a 15.9 percent tumble in civilian aircraft. Boeing reported on its website that it had received 45 orders for civilian aircraft versus 52 in July.
Motor vehicle and parts orders climbed 0.3 percent . A strike by the United Auto Workers union against General Motors Co, Stellantis and Ford Motor could weigh on orders and shipments in September and potentially be a drag on business investment in the fourth quarter if it is not resolved soon.
Durable goods inventories rose 0.2 percent , while unfilled orders increased 0.4 percent . The data suggested that manufacturing, which makes up 11.1 percent of the economy, was muddling along, despite surveys suggesting that the sector was mired in recession.
