July Durable Goods Orders Up 5.9 Percent

Census Bureau reports significant rise in orders for big-ticket goods, suggesting strong momentum in equipment and machinery sectors.

WASHINGTON — New orders for durable goods in July rose 5.9 percent to $230.7 billion, marking its highest level since 1992, the U.S. Census Bureau said Friday.
Shipments of durable goods increased 3.8 percent to $219.8 billion. Unfilled orders rose 2.4 percent to $754.9 billion. Inventories increased 0.1 percent to $313 billion. All three were at their highest levels since 1992.
Nondefense new orders for capital goods rose 5.8 percent to $81.9 billion. Defense new orders for capital goods rose 35.7 percent to $9.7 billion.
“The 5.9 percent increase in July durable goods orders and, more importantly, the 2.2 percent gain in nondefense capital goods orders excluding aircraft, indicate that the equipment and machinery side of manufacturing was gathering substantial momentum  prior to the August liquidity squeeze in the financial markets,” said Daniel J. Meckstroth,  Chief Economist for the Manufacturers Alliance/MAPI. “These durable goods order statistics show that firms had enough confidence in the outlook to make investments in equipment and machinery last month. 
“The financial turmoil in August casts a pall over this stellar economic report,” he added.  “Just as firms were gaining confidence and investing in the future, credit markets turn frosty and stock markets panicked.  Unfortunately, it will be another 30 days before there is data to answer the important question of whether the financial contagion affected the financing of capital expenditures.”
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