US durable goods orders dip, business spending up

WASHINGTON - New orders for long-lasting US manufactured goods slipped in August on weak demand for motor vehicles, but a rebound in a gauge of business spending supported views the economy would likely avoid another recession.

The Commerce Department said on Wednesday durable goods orders dipped 0.1 percent after a 4.1 percent jump in July.

Economists had forecast durable goods orders, items ranging from toasters to aircraft meant to last three years or more, would be unchanged last month.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, increased 1.1 percent last month after a 0.2 percent fall in July.

This suggested that businesses, sitting on about $2 trillion in cash, had not responded to the recent financial market volatility by curtailing spending on capital goods.

Economists had expected a 0.3 percent rise in this category.

“It shows that we’re not falling off a cliff, which helps. This is a sigh of relief, and slightly reassuring in the short-term,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

US stock index futures added to gains. US bond prices on the long end pared gains, while the Euro trimmed gains versus the dollar.

Although manufacturing, which has done the heavy lifting for the fragile economy recovery, is slowing, August’s durable goods report pointed to underlying resilience and offered hope output would continue to expand.

Orders last month were held back by an 8.5 percent drop in bookings for motor vehicles — the largest decline since February last year.

The drop in orders came despite a 23.5 percent rise in orders for civilian aircraft last month.

Boeing received 127 orders for aircraft, according to the plane maker’s website, up from 115 in July. Delta Airlines placed an order for 100 aircraft.

Excluding transportation, orders also slipped 0.1 percent after rising 0.7 percent in July. Economists had expected this category would also be unchanged.

Outside of transportation and primary metals, which fell 0.8 percent, details of the durable goods report were relatively strong.

Orders for machinery edged up 0.1 percent, while computers and electronic products rose 1.3 percent. Demand for capital goods increased 4.2 percent and electrical equipment and appliances rose 1.3 percent.

Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, increased 2.8 percent after rising 0.4 percent in July.