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Orders for U.S. Durable Goods Fell More Than Forecast

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Orders for U.S. Durable Goods Fell More Than Forecast

Orders for U.S. durable goods fell more than forecast in July after three months of increases, indicating manufacturing will be slow to strengthen.

Bookings (DGNOCHNG) for goods meant to last at least three years decreased 7.3 percent, the most since August 2012, after a 3.9 percent gain in June, the Commerce Department said today in Washington. The median forecast of economists surveyed by Bloomberg called for a 4 percent drop. Orders waned for aircraft and capital goods such as computers and electrical equipment.

The report shows struggling overseas markets and the effects of federal government spending cuts are lingering and holding back manufacturing, which accounts for about 12 percent of the economy. Further improvement in the labor market and sustained demand for automobiles and housing would help spur production through the second half of the year.

The data support “our view that the fiscal drag will last longer -- part of the decline was from defense -- and growth will stay moderate,” said Michael Gapen, senior U.S. economist at Barclays Plc in New York. “We are in a highly uncertain environment.”

Stock-index futures were little changed after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September rising less than 0.1 percent to 1,662.3 at 8:55 a.m. in New York.

Minus Transportation

Orders excluding transportation equipment, which is volatile month to month, declined 0.6 percent after a 0.1 percent gain in June that was previously estimated as a 0.1 percent decrease.

Forecasts for all durable goods orders in the Bloomberg survey of 77 economists ranged from a drop of 8.2 percent to a 3 percent advance.

Today’s figures showed bookings for commercial aircraft decreased 52.3 percent after climbing 33.8 percent in June. Chicago-based Boeing Co. (BA) said it received 90 aircraft orders in July, down from 287 the previous month.

Orders for military equipment decreased 21.7 percent last month after a 28.7 percent jump in June. Demand excluding defense hardware fell 6.7 percent in July.

Demand for non-defense capital goods excluding aircraft, a proxy for future business investment in computers, electronics and other equipment, dropped 3.3 percent in July, the biggest decrease in five months, after rising 1.3 percent in the prior month.

Shipments of those products, a measure used in calculating gross domestic product, declined 1.5 percent after falling 0.8 percent in June. The value of capital goods sales in July was $65 billion, compared with an average of $65.9 billion in the second quarter, indicating business investment was gaining little traction at the start of the third quarter.

Second Quarter

The U.S. economy grew at a 1.7 percent annualized rate in the second quarter after a 1.1 percent gain the prior three months, Commerce Department figures show. The economy has grown at an average 2.2 percent quarterly pace since the recession ended June 2009.

Growth is projected to pick up in the second half of the year, climbing 2.3 percent in the third quarter and 2.6 percent in the last three months of the year, according to the median in a Bloomberg survey of 59 economists from Aug. 2 to Aug. 6.

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