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July Durable Goods Orders Rise More Than Expected Amid Civilian Aircraft Boost

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July Durable Goods Orders Rise More Than Expected Amid Civilian Aircraft Boost

US durable goods orders rose more than projected in July, led by strong demand for civilian aircraft, official data showed Wednesday.

Orders for tangible items with an average lifespan of at least three years increased 1.1% to $339.25 billion last month, following a 0.5% increase in June, the Census Bureau said. The consensus was for a 0.5% gain in a Bloomberg poll.

New orders for transportation equipment grew 2.3% in July, with the nondefense aircraft and parts component surging nearly 13%, according to government data.

Earlier this month, Boeing (BA) data showed that the planemaker booked orders for 38 jets in July, shrinking from 121 the previous month, but up from 31 a year earlier.

Demand for defense aircraft increased 4.9% last month, while the motor vehicles and parts component grew 0.9%. A majority of categories logged gains, official data showed Wednesday.

"Anticipated business spending on equipment continues to be robust, indicating that further strength is in store for business investment during (the second half of the year)," Oxford Economics Lead US Economist Nancy Vanden Houten said in remarks e-mailed to.

The firm's upbeat outlook is backed by several factors, including manufacturers' continued expansion in order books and an artificial intelligence buildout that is showing "no signs of slowing," Vanden Houten said.

"Businesses have run down their pre-tariff inventories, setting the stage for a restocking cycle that will support manufacturing output," Vanden Houten wrote. "The biggest risk is the on-again, off-again conflict between the US and Iran, but uncertainty around the price of oil doesn't seem to have deterred business spending on equipment so far."

Excluding transportation, durable goods orders increased 0.4% last month, but trailed Wall Street's expectations for growth of 0.6%, official data showed.

"Our August baseline assumes real annualized growth in business equipment spending of 6.8% in (the third quarter), down sharply from 15.2% in (the second quarter), but still a solid pace of growth," Vanden Houten said.

Price: $211.85, Change: $+0.77, Percent Change: +0.36%

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