U.S. Durable Goods Orders Rebound 0.7% In June, More Than Expected

(RTTNews) - After reporting an unexpected drop in new orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report on Friday showing that durable goods orders rebounded by more than expected in the month of June.

The Commerce Department said durable goods orders increased by 0.7 percent in June following a 1.0 percent decrease in May. Economists had been expecting orders to climb by about 0.5 percent.

The bigger than expected increase in durable goods orders was partly due to a substantial rebound in orders for machinery, which jumped by 2.4 percent in June after falling by 1.2 percent in May.

Notable increases in orders for primary metals and computers and electronic products also contributed to the overall growth.

The report also said orders for transportation equipment rose by 0.6 percent in June after tumbling by 2.8 percent in May.

Excluding orders for transportation equipment, durable goods orders rose by 0.8 percent in June compared to a 0.1 percent drop in the previous month.

The Commerce Department also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, surged up by 1.4 percent in June after slumping by 1.2 percent in May.

Meanwhile, shipments of non-defense capital goods excluding aircraft, which get plugged into GDP, fell by 1.0 percent in June after edging down by a revised 0.1 percent in the previous month.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "This suggests that after falling by 2.8% in the first quarter, business investment in equipment may have rebounded by 8% in the second."

"Previously an increase of closer to 15% looked likely," he added. "We now expect that annualized GDP growth in the second quarter was 3.2%."

Early next month, the Commerce Department is scheduled to release a separate report on factory orders in the month of June. The report includes data on orders for both durable and non-durable goods.