WASHINGTON — New orders for durable goods in July edged upward 0.3% thanks to a flood of aircraft and auto purchases, but many other categories recorded significant declines, the Commerce Department reported Wednesday.
Orders excluding transportation plunged 3.8% to post the category’s largest drop in 18 months. The decline was led by a record 15% reduction in machinery orders.
Economists expected durable goods to fall 1.2% and predicted that orders excluding transportation would contract 0.9%, according to the median estimate from Thomson Reuters.
“The July durable goods report was another troubling data point in a long string of reports that spell trouble for the U.S. economy,” said Ellen Beeson Zentner, a senior economist with the Bank of Tokyo-Mitsubishi. “The recovery has been relying so heavily on the industrial [sector] and it seems as though that support has now all but disappeared.”
Durable goods orders for June were revised higher to a 0.1% decline from the 1.0% drop initially reported last month. June orders excluding transportation were revised to a 0.2% dip from the initially reported 0.6% decline.
Nonmilitary capital goods excluding aircraft fell 8.0% in July. Shipments dropped 1.5% and unfilled orders declined 0.4%. Nondefense capital goods fell 2.8%, the largest decline since March 2009.
Orders for transportation gear rose 13.1% and motor vehicles rose 5.3%.
“The shortfall in durable goods orders is just one in a series of reports confirming our forecast that the recovery is losing momentum,” Diane Swonk, chief economist of Mesirow Financial, said in a research note. “In response, Fed chairman Ben Bernanke is expected to corral the dissenters among the ranks of the Fed and convince his colleagues to ease further — maybe as soon as September.”
