Transportation Gives Factory Orders a Lift in July

Strong factory orders, auto sales brighten U.S. growth picture.

Boeing
Elaine Thompson/APA Boeing employee playfully shows off his muscles while working on a Boeing 787 jet at the company's plant in Everett, Wash.
By Lucia Mutikani

WASHINGTON -- New orders for U.S. factory goods jumped in July and automobile sales in August were unexpectedly strong, offering further signs of strength in the manufacturing sector.

The Commerce Department said Wednesday new orders for manufactured goods increased a record 10.5 percent on robust demand for transportation equipment. June's orders were revised to show a 1.5 percent increase instead of the previously reported 1.1 percent rise.

Orders excluding the volatile transportation category slipped 0.8 percent in July. But that followed a 1.4 percent increase the prior month, leaving the overall trend positive for manufacturing activity.

Separate reports from automakers suggested August sales were set to reach volumes not seen since before the 2007-2009 recession, as Ford Motor (F), Chrysler Group and Nissan Motor easily beat analyst estimates.

Ford's sales were up 0.4 percent, while Chrysler, a unit of Fiat, showed a 20 percent gain, the automakers reported on Wednesday. Nissan's sales were up 11.5 percent. Analysts looked for sales gains of 11.8 percent for Chrysler and 2.8 percent for Nissan, and a decline of 1.9 percent for Ford.

General Motors (GM) said August sales fell 1.2 percent, narrowly missing expectations.

Manufacturing is accelerating, with the Institute for Supply Management reporting Tuesday that its gauge of factory activity hit its highest level in nearly 3½ years in August. In addition, a measure of new orders touched a 10-year high.

Economists say the acceleration in factory activity suggested a pickup in business spending on capital and supported their forecasts for sturdy growth in the third quarter.

Growth estimates for the July-September period range as high as a 3.5 percent annual pace. The economy expanded at a 4.2 percent rate in the second quarter.

The dollar was trading lower against the euro and the yen, while U.S. stocks rose.

Record Orders

Orders for transportation equipment soared a record 74.1 percent in July, reflecting outsized civilian aircraft orders received by Boeing (BA) that was flagged in the durable goods orders report published last week.

Auto orders rose 7.3 percent, the largest increase since March 2011, and capital goods orders surged a record 52.5 percent. But orders for primary metals, machinery, computers and electrical equipment, appliances and components fell.

Unfilled orders at factories increased 5.4 percent, the largest advance since June 2000. That followed a 1 percent gain in June.

The Commerce Department also said orders for durable goods, manufactured products expected to last three years and more, increased a record 22.6 percent in July, as reported last week.

Durable goods orders excluding transportation slipped 0.7 percent instead of the previously reported 0.8 percent fall.

Orders for non-defense capital goods excluding aircraft -- seen as a measure of business confidence and spending plans -- declined by a slightly bigger 0.7 percent. They were previously reported to have slipped 0.5 percent.

-With additional reporting by Bernie Woodall and Ben Klayman in Detroit.


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