Tags: Weak | Durable | Goods | Double | Dip | Fears

Weak Durable Goods Orders Reignite Double-Dip Fears

Wednesday, 28 Jul 2010 11:28 AM

New orders for long-lasting U.S. manufactured goods unexpectedly fell for a second straight month in June, posting their largest decline since August, further evidence economic growth cooled in the second quarter.

The Commerce Department said on Wednesday durable goods orders fell 1.0 percent after a revised 0.8 percent drop in May.

Analysts polled by Reuters had forecast orders increasing 1.0 percent in June from May's previously reported 0.6 percent fall.

"The number was weaker than expected and it could add to the idea that the economy is slipping into a double dip recession," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co. in Nashville.

Data ranging from consumer spending to manufacturing have suggested the recovery from the longest and deepest recession since the 1930s took a step back in the past few months.

The government is expected to report on Friday that growth slowed to a 2.5 percent annual rate in the April-June period from a 2.7 percent pace in the first three months of the year, according to a Reuters survey.

Durable goods orders had been expected to rise based on the fact that Boeing received 49 orders for civilian aircraft in June compared to only five in May.

But non-defense aircraft orders tumbled 25.6 percent in June after falling 30.2 percent the prior month. Overall orders were also pulled down by bookings for computers and electronic products, which saw their largest decline since October.

Orders for machinery recorded their biggest decline in 14 months, while those for primary metals fell by the most since March 2009.

Durable goods orders are a leading indicator of manufacturing, which in turn provides a good measure for overall business health.

Manufacturing is leading the economy's recovery from the most brutal downturn since the 1930s as businesses replenish inventories drawn down to record lows during the recession, but has shown some signs of exhaustion in recent months.

New durable goods orders excluding transportation fell 0.6 percent last month after increasing 1.2 percent in May.

Analysts polled by Reuters had forecast new orders excluding transportation gaining 0.3 percent from a previously reported 1.6 percent increase.

In a positive sign, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.6 percent in June after increasing an upwardly revised 4.6 percent the previous month. Markets had expected a flat reading.

Durable goods inventories rose 0.9 percent, increasing for the sixth straight month. Shipments, which go into the calculation of gross domestic product, fell 0.3 percent in June after sliding 0.7 percent in May.

Unfilled orders were flat after increasing 0.3 percent in May.

Separately, demand for loans to buy homes rose for the second straight week to the highest level since the end of June, but hovered just above 13-year lows, the Mortgage Bankers Association said.

Home purchase loan demand increased 2.0 percent last week, but rising mortgage rates saw applications for refinancing falling 5.9 percent.

© 2017 Thomson/Reuters. All rights reserved.

   
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New orders for long-lasting U.S. manufactured goods unexpectedly fell for a second straight month in June, posting their largest decline since August, further evidence economic growth cooled in the second quarter. The Commerce Department said on Wednesday durable goods...
Weak,Durable,Goods,Double,Dip,Fears
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2010-28-28
Wednesday, 28 Jul 2010 11:28 AM
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