Washington, July 28--Durable-goods demand increased in June after back-to-back declines, as defense aircraft orders surged and capital-equipment spending climbed.
The Commerce Department said today that orders for longer-lasting manufactured goods rose 0.7% to $191.7 billion last month. Non-defense capital goods excluding aircraft -- a barometer of business spending -- climbed 1.2%, after dropping 1.9% in May.
The data showed May demand for overall durable goods fell 0.9% as opposed to a previously reported 1.8% drop. Orders in April fell an unrevised 2.7%.
The report on June durables was weaker than expected on Wall Street. A Dow Jones-CNBC survey of 24 economists had forecast orders up 1.5%.
Estimates on durable goods fluctuate, sometimes widely, and are subject to revision; analysts caution against using monthly figures when trying to tell where the U.S. economy is going.
Other data suggest strength in the manufacturing sector. The Institute for Supply Management, a private research group, said earlier this month that its index of manufacturing activity posted a 61.1 reading in June. That was lower than May's 62.8 and 62.4 in April; readings above 50, however, indicate expansion in manufacturing.
Economists say businesses have an incentive to purchase new equipment before the benefits of accelerated depreciation expire at year's end.
The government's durable-goods report for June showed increases in some categories.
Transportation orders advanced by 4.2%. May orders fell 1.8%.
Non-defense aircraft orders decreased 8.0%, while defense aircraft demand shot up 79.1%. Cars and parts advanced 1.3%.
Excluding transportation when calculating demand for all durable goods, overall orders decreased by 0.6%.
Capital goods orders rose by 4.1% after going down 2.7% the prior month. There was a 30.4% increase in demand for defense-related items. Excluding defense orders from calculations, overall durable-goods orders went down by 0.4%.
Orders rose by 1.1% for non-defense capital goods, which are meant to last at least 10 years and act as an indicator of business spending. Demand fell 1.4% in May.
Orders for computers and electronic products declined by 1.0% in June. Machinery orders rose by 0.3%. Demand for primary metals went down 0.4%. Fabricated metal products climbed 3.3%. Orders for electrical equipment and appliances declined by 4.4%.
Durable-goods inventories went up by 0.7%. Unfilled orders rose 0.6%. Shipments rose by 0.7%.
