NEWS
07/27/2015 08:51 EDT | Updated 07/27/2016 01:12 EDT

Orders for US durable goods jump 3.4 per cent in June, reflecting surge in commercial aircraft

WASHINGTON — Orders to U.S. factories for big-ticket manufactured goods posted a sizable gain in June, reflecting a surge in demand for commercial aircraft. Meanwhile, a key category that reflects business investment rebounded after two months of declines.

Orders for durable goods jumped 3.4 per cent in June from May, when orders had fallen 2.1 per cent, the Commerce Department reported Monday. The gain was the best result since March.

A category viewed as a proxy for business investment plans increased 0.9 per cent, then best showing since a 1.6 per cent rise in March. This category had declined in April and May and had been weak for a number of months. Some economists are hopeful that manufacturing will show stronger gains in coming months as consumers boost spending.

U.S. manufacturers have struggled this year from the effects of a strong dollar and a plunge in energy prices. The higher value of the dollar against foreign currencies makes U.S. goods more expensive and less competitive in major export markets. The big drop in oil prices has led energy companies to cut investment plans.

The overall economy stalled in the January-March quarter, with the gross domestic product shrinking at an annual rate of 0.2 per cent. Analysts blamed that weakness on a number of temporary factors including a harsh winter. They expect growth to rebound to around 2.5 per cent in the April-June quarter. The government will release its first estimate of GDP growth in the spring on Thursday.

For June, demand for aircraft shot up 66.1 per cent, recovering from a 31.6 per cent plunge in May. Orders for motor vehicles and parts posted a modest 0.2 per cent increase. Overall demand for transportation goods increased 8.9 per cent. Excluding this often volatile category, orders were up 0.8 per cent in June, the best showing outside of transportation in 10 months.

The 0.9 per cent gain for non-defence capital goods orders excluding aircraft, the category used as a proxy for investment, followed a decline of 0.4 per cent in May.

Orders for machinery were up 1.4 per cent, while demand for computers and related products shot up 9.1 per cent.

Martin Crutsinger, The Associated Press