WASHINGTON, July 27 (Reuters) – New (KOSDAQ: 160550.KQ – news) orders for U.S (Other OTC: UBGXF – news). manufactured capital goods rose less than expected in June amid weak demand for machinery, suggesting an ongoing downturn in business spending.
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New orders for USA manufactured capital goods rose less than expected in June amid weak demand for machinery and a range of other goods, suggesting a prolonged downturn in business spending.
Businesses have scaled back investment over the past year amid falling profits, falling demand for exports and fewer sales to key customers in the US such as energy producers.
Demand for durable goods dropped 4 percent in June, the biggest setback since an 18.4 percent drop in August 2014, the Commerce Department reported Wednesday. Contracts usually become sales after one or two months. The figures are published monthly by the U.S. Census Bureau. United States stocks were trading higher, boosted by strong financial results from Apple.
Orders for durable or long-lasting goods made in the US sank 4% in June, marking the biggest drop in nearly two years and reflecting ongoing struggles by American manufacturers to drum up sales and help boost the USA economy.
Uncertainty over global demand and the upcoming United States presidential election are also making companies cautious about spending, economists say.
Prospects for a pick-up in business spending remain dim against the backdrop of lackluster corporate profits. Everything conspiring against the durables sector in 2015 will remain working against it for at least the balance of 2016″, said Michael Montgomery, a US economist at IHS Global Insight in Lexington (Swiss: “OXLEXI.SW – news), Massachusetts.
Shipments of manufactured durable goods in June, up two of the last three months, increased 0.4 percent to $232.5 billion.
Orders for non-defense aircraft and parts showed a particularly substantial decline, plummeting by 58.8 percent during the month.
The June durable goods numbers, which were worse than expected, weaken slightly the picture for overall economic growth in the second quarter, analysts said.
Should spending on equipment drop in the second quarter U.S. GDP data due on Friday, that would be the first time since the 2007-2009 recession that outlays would have contracted for three straight quarters.
The report said durable goods orders tumbled by 4.0 percent in June following a revised 2.8 percent decrease in May. Ex-transportation orders had been expected to rise by 0.3 percent.
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Contracts to buy previously owned USA homes rose far less than expected in June, another sign that a lack of inventory is crimping activity despite mortgage rates being at near-record lows.
