According to the Commerce Department, orders for long-lasting goods declined 2% in August compared with the 2.3% drop analysts had forecast and with the 1.9% increase registered in the previous month. The prior report for July was for a 1.9% increase, down from the preliminary report of a 2.0% gain. Orders outside of the transportation categories remained flat this in August whereas this category has seen a slight rise of 0.4% in July. Excluding defense, new orders decreased $2.2 billion or 1.0%.
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Transportation orders fell by 5.8 per cent. Civilian aircraft orders drove the decline, falling by 5.9 per cent. Separately, the nation’s largest aircraft manufacturer, Boeing Co. said it received fewer orders for planes in August than in July.
“Investment in equipment appears to be recovering in the third quarter”, Ashworth said in a research note.
“The smaller-than-expected declines for core capital goods orders and shipments in August suggest a bit more equipment investment in Q3 than we had previously expected”. Data points to a big decline in August for aircraft. The most core component, non-defense capital goods excluding aircraft, showed a slightly drop over the prior month and the historical performance can be seen in the chart below. A survey of supply-chain executives conducted by the Institute for Supply Management found USA manufacturing expanded at a slower pace in August than July.
A stronger dollar increases prices of US goods in foreign markets, whereas weakness in the world’s second biggest economy, China, also puts pressure on the global economy.
The overall economy, as measured by the gross domestic product, grew at an annual rate of 3.7 percent in the April-June quarter, an estimate that will be revised on Friday.
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Demand for machinery was up 1 percent but orders for computers fell 5.7 percent.
