Washington, DC, August 4--Demand for U.S. factory goods showed surprising strength during June in another key sign issued this week of improvement in the manufacturing sector.
Factory-goods orders rose by 0.7%, following an upwardly revised 0.4% advance in May, the Commerce Department said Wednesday. May orders were originally estimated as dropping 0.3%. That means factory orders went up four times in the last five months. The report exceeded expectations on Wall Street, which was looking for just a 0.5% increase.
The government also raised an estimate issued last week for June durable goods orders. It said demand for those goods designed to last at least three years climbed by 0.9%, compared to the earlier projected 0.7% increase.
The data gave another bullish sign on manufacturing, a sector pulling away from the sluggishness of the not-too-distant past. A report Monday by the Institute for Supply Management showed economic activity in the manufacturing sector grew in July for the 14th consecutive month. The ISM's index of manufacturing activity moved to 62.0, versus 61.1 in June and 62.8 in May. Readings above 50 point to expansion in activity.
The factory orders report showed increases in several categories during the month. Non-durable goods orders rose by 0.5% for the month after a 2.0% gain in May.
A key barometer of business spending -- non-defense capital goods orders minus aircraft -- advanced 1.1%, after falling 2.0% in May.
Consumer-goods orders went up by 0.5%, after a 2.3% advance in May; consumer durable-goods orders rose 0.6%, consumer non-durables gained 0.5%.
Demand for transportation-related goods rose by 4.4%, after decreasing by 1.8% in May. Non-defense aircraft and parts orders fell 8.0%, while defense aircraft and parts orders rocketed up 79.1%. Orders for motor vehicle bodies and parts fell by 0.2%. Excluding transportation orders, overall factory orders would have gone up by 0.1%.
Defense capital-goods orders rose by 30.4% in June, after tumbling 12.4% in May. Without defense orders, overall factory orders would have gone up 0.1%.
Demand for all non-defense capital goods -- business equipment meant to endure at least 10 years -- increased by 1.0%.
Orders for computers and electrical components declined by 1.3% in June. Primary metals dipped 0.1%; machinery orders increased 0.8% and electrical equipment and appliances sank 4.7%.
The report also showed that factory shipments rose by 0.7%. Unfilled orders gained 0.6%. Factory inventories increased by 0.7%.
