By Lucia Mutikani
WASHINGTON -- Orders for long-lasting U.S. manufactured goods posted their biggest gain on record in July on strong international demand for aircraft, but the underlying trend remained consistent with a steady pace of economic growth.
Durable goods orders, items ranging from toasters to aircraft that are meant to last three years or more, jumped 22.6 percent last month after an upwardly revised 2.7 percent increase in June, the Commerce Department said on Tuesday.
Transportation orders rose a record 74.2 percent as bookings for civilian aircraft more than tripled. Boeing (BA) had said earlier it received a record 324 aircraft orders in July.
Many of the orders, including 150 planes by the Dubai-based airline Emirates, were for expensive models, some still under development. It will take at least 10 years for the resulting increase in production to filter through to U.S. gross domestic product.
Outside of transportation, demand was decidedly softer. Still, upward revisions to the data for June as well as rising shipments and orders backlogs showed the factory sector remained on firm ground.
"This report reinforces the message that manufacturing growth is picking up and is likely to support stronger GDP growth in the second half of the year," said John Ryding, chief economist at RDQ Economics in New York.
U.S. stocks traded higher, with the S&P 500 index near an all-time high. Boeing was little changed. Prices for U.S. Treasury debt were up, while the dollar was flat against a basket of currencies.
Separately, the Conference Board said consumer confidence hit its highest level in nearly seven years in August. A gauge of households' perceptions of the labor market touched its best level since July 2008.
That also boosted views that the economy remains on a solid growth path, even though another report showed a deceleration in house price growth in June.
The S&P/Case Shiller's broader house price index rose 6.2 percent in the 12 months to June, the smallest gain since November 2012, compared to a 7 percent rise in May.
Strong Orders for Automobiles
While the outsized order increase from Boeing dominated the surge in durable goods orders last month, orders for autos increased 10.2 percent after declining 1.3 percent in June.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.5 percent in July.
The decline, however, followed an upwardly revised 5.4 percent advance in June. Core capital goods orders were previously reported to have increased 3.3 percent in June.
Core capital goods shipments increased 1.5 percent last month. Shipments of core capital goods are used to calculate equipment spending in the government's GDP measurement.
"That suggests that capital spending ended the second quarter on solid footing, with that positive momentum carrying over to start the third quarter," said Omair Sharif, senior economist at RBS in Stamford, Connecticut.
Other details of the report also favor manufacturing in the months ahead.
Unfilled orders for core capital goods increased 1.1 percent last month after rising 1.7 percent in June, showing a steady pipeline of work that will keep the nation's factories busy for a while.
Durable goods inventories rose 0.5 percent in July, matching the gain in the prior month, suggesting inventory accumulation could add to third-quarter growth after helping to boost output in the second quarter.
Durable Goods Orders Soar on Surge in Aircraft Demand
More from Reuters
•Obama Vows Response to North Korea for Sony Cyberattack
•White House Releases Snapshot of Plan to Rate Colleges
•Market Wrap: Wall Street Sees Best 2-Day Gain Since 2011