New orders for U.S. manufactured durable goods fell by much more than expected in the month of July, according to a report released by the Commerce Department on Monday. The report said durable goods orders tumbled by 7.3 percent in July following a 3.9 percent increase in June. Economists had expected orders to fall by about 4.0 percent. The decrease, which came following three consecutive monthly increases, was largely due to a sharp pullback in orders for transportation equipment.
The Commerce Department said orders for transportation equipment plummeted by 19.4 percent in July after surging up by 11.7 percent.
Orders for non-defense aircraft and parts plunged by 52.3 percent, as aerospace giant Boeing (BA) reported a sharp drop in orders for the month.
Excluding the pullback in orders for transportation equipment, durable goods orders fell by a more modest 0.6 percent in July compared to a 0.1 percent increase in the previous month. The report showed steep drops in orders for computers and related products and electrical equipment, appliances, and components. Orders for non-defense capital goods excluding aircraft, which is seen as an indicator for business spending, fell by 3.3 percent in July after rising by 1.3 percent in June.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "Overall, given the renewed strength in the surveys the fall in orders could just be a temporary blip, particularly as orders have been fairly robust over the preceding few months."
"Nevertheless, 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," he added. The report also showed that shipments of manufactured durable goods dipped by 0.3 percent in July following a 0.1 percent decrease in June. Meanwhile, inventories of manufactured durable goods rose by 0.4 percent in July after edging up by 0.2 percent in the previous month.