New orders for U.S. factory goods rose more than expected in June as demand increased across the board, pointing to a strengthening in manufacturing activity.
The Commerce Department said on Tuesday that new orders for manufactured goods increased 1.1 per cent after a downwardly revised 0.6 per cent decline in May.
Economists polled by Reuters had forecast new orders received by factories rising only 0.6 per cent after May’s previously reported 0.5 per cent fall.
Manufacturing is expanding strongly, helping to keep the economy on solid ground. A survey last Friday showed that new orders at the nation’s factories surged in July.
Automobile production is also accelerating. But businesses amassed huge piles of stocks in the second quarter, which they will probably need to work through before placing more orders.
That could take some edge off factory activity and overall economic growth. The economy grew at a 4.0 per cent annual pace in the April-June period, and growth estimates for the third quarter are currently around a 3 per cent rate.
Orders excluding the volatile transportation category jumped 1.1 per cent in June, the largest increase since July of last year, as bookings for primary metals, machinery and electrical equipment, appliances and components rose. Orders for computers and electronic products also increased.
Unfilled orders at factories rose 1.0 per cent. Order backlogs have increased in 14 of the past 15 months.
The Commerce Department also said orders for durable goods, manufactured products expected to last three years and more, rose a sturdy 1.7 per cent in June instead of the 0.7 per cent rise reported last month.
Durable goods orders excluding transportation surged 1.9 per cent instead of the previously reported 0.8 per cent advance.
Orders for non-defence capital goods excluding aircraft – seen as a measure of business confidence and spending plans – increased 3.3 per cent, revised up from the 1.4 per cent gain reported last month.
The factory orders report showed inventories rose 0.3 per cent in June, slowing from May’s 0.8 per cent gain. Shipments rose 0.5 per cent after slipping 0.1 per cent in May. The inventories-to-shipments ratio was unchanged at 1.31.
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