Durable goods post strong increases in July, June

WASHINGTON " Orders for big-ticket manufactured goods turned in a second consecutive strong monthly performance in July, a far bigger-than-expected gain led by a huge jump in demand for commercial aircraft.

The Commerce Department said Wednesday that orders for durable goods rose 1.3 percent last month, far above the slight 0.1 percent increase economists had been expecting.

The July increase matched a 1.3 percent rise in June, which was revised up from an earlier reading of 0.8 percent. Both months turned in the strongest gains since a 4.1 percent surge last December.

Economists had been expecting a far weaker showing in July reflecting their views that the manufacturing sector is being battered by the slowdown facing the overall economy. Instead, the report showed surprising strength in a number of areas.

Demand for commercial aircraft shot up 28 percent, a rebound following a 21.3 percent drop in June.

Orders for motor vehicles rose by 1.2 percent, the second straight monthly increase. However, economists do not believe that strength can be sustained given all the troubles currently facing the auto industry.

Overall, orders for transportation equipment were up 3.1 percent last month after a 1.9 percent drop in June. Outside of transportation, orders posted a 0.7 percent increase, surpassing the 0.3 percent decline analysts had expected.

Strength outside of transportation reflected strong gains in such areas as primary metals, including steel and machinery.

Non-defense capital goods excluding aircraft, a category seen as a good proxy for business investment, also rose by a strong 2.6 percent last month, the best showing since April.