Orders for United States durable goods unexpectedly increased in July, indicating that growing demand from abroad is still helping companies weather a slump in domestic spending.
The 1.3-percent gain in orders for goods such as cars, computers and equipment meant to last several years matched the previous month's rise, which was larger than previously estimated, the US Commerce Department said yesterday in Washington. Excluding transportation equipment, orders rose 0.7 percent after a 2.4-percent increase a month earlier.
The boost to the US from trade, which was the biggest in almost 28 years last quarter, may wane after figures this month showed shrinking economies in the euro region and Japan. Many Federal Reserve officials anticipate export gains will fade, minutes of their August 5 meeting showed.
"The impact from global weakening so far on US manufacturers remains modest," Aaron Smith an economist at Moody's Economy.com, said in an interview with Bloomberg Television.
Because of domestic weakness, the economy may still slow or contract "while simultaneously still having very modest weakness in manufacturing and capital spending," he said.
Treasuries fell after the report and stock futures gained. The benchmark 10-year note yielded 3.82 percent yesterday in New York yesterday, up 4 basis points from Tuesday.
Analysts wrong
Economists projected orders would be unchanged after a previously reported 0.8-percent increase in June, according to the median of 76 forecast in a Bloomberg News survey. Estimates ranged from a drop of 2.1 percent to a gain of 2.2 percent.
Bookings for non-defense capital goods excluding aircraft, a measure of future business investment, increased 2.6 percent, the most since April. Shipments of those items, used in calculating gross domestic product, rose 0.6 percent following a 0.4-percent gain that was smaller than previously estimated.
Yesterday's figures will probably have little impact on economists' forecasts for growth in the second quarter. Revised gross domestic product figures from the Commerce Department, due today, may show the economy expanded at a 2.7-percent annual rate from April through June, up from an advanced estimate of 1.9 percent reported last month as exports jumped, according to a Bloomberg News survey.
Business spending on new equipment and software dropped at a 3.4-percent annual pace last quarter, the second consecutive decline and the biggest since the first three months of 2004.
Growth will probably slow as the effects of the federal tax rebates wear off and consumer spending weakens.
