Demand for US durable goods increased less than estimated last month amid declines in orders for defense aircrafts and motor vehicles, government data showed Monday.
Orders for tangible items with an average life of at least three years rebounded 0.3% sequentially to $334.77 billion in June, following a 4% decline the month prior, according to the Census Bureau. The consensus was for a 1.8% rise for June in a survey compiled by Bloomberg.
New orders for transportation equipment fell 0.2% last month. Demand for defense aircraft decreased 7.2%, following a gain of 8.9% in May, while the civilian aircraft component grew 3.7% in June. The motor vehicles and parts component dropped 0.6%, official data showed.
Demand for computers and electronic products rose 3.1%, while several other components also saw gains. Defense capital goods orders nudged 0.5% higher month on month in June, according to the report.
"Despite a weaker-than-expected headline figure, the details in the June report suggest the US economy remains resilient, with business investment continuing to provide an important pillar of strength," BMO Capital Markets Senior Economist Priscilla Thiagamoorthy said in a note to clients.
Earlier this month, data from planemaker Boeing (BA) showed that it booked orders for 121 jets in June, jumping from 27 the previous month and 116 a year earlier.
Excluding transportation, durable goods orders increased 0.6% last month, but trailed Wall Street's expectations for growth of 0.8%, according to official data released Monday.
"For the (Federal Reserve), this becomes a double-edged sword," Thiagamoorthy said. "On one side, strong (capital expenditure) supports economic activity and productivity. On the other, Fed officials have recently noted that the ongoing boom in (artificial intelligence)-related investment may sustain inflationary pressures."
Markets are pricing in a 64% probability that the central bank's Federal Open Market Committee will leave it monetary policy unchanged Wednesday, with the remaining odds in favor of a quarter-percentage-point increase, according to the CME FedWatch tool.
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