Durable Goods Orders Up Nearly 5 Percent

Washington, DC, Aug. 26, 2009--Orders for new U.S.-made durable goods were up by 4.9%, the largest increase in two years, the Commerce Department reported Wednesday.

Excluding the 18.4% increase in transportation goods, orders rose 0.8%, the third gain in a row and the longest upward streak in four years.

Orders for durable goods -- expensive manufactured goods designed to last three years or more -- had fallen 1.3% in June, revised up from the 2.5% drop originally reported. Orders were down 26% in the first seven months of 2009 compared with the same period last year.

Economists had been looking for a 4% gain in durable-goods orders last month.

Shipments of durable goods rose 2% in July after a 0.7% increase in June. Inventories fell 0.8%, a sign that manufacturers are getting their once-bloated stockpiles of goods back in line with demand, which should boost economic growth in the second half of the year.

Morgan Stanley economists boosted their forecast for third-quarter gross domestic product growth to 4.3% from 3.9%.

July's strong gains in orders and shipments are consistent with other evidence pointing to a revival of manufacturing output following the steepest drop in 60 years earlier in the year.

While the increase in durable-goods orders for July was concentrated in transportation, gains were seen as well in most other industrial sectors. Orders for machinery fell sharply, however.