Durable-goods orders fall larger-than-expected 7.3 percent in July

Staff Writer
Columbus CEO

WASHINGTON — Orders for airplanes, computers and other durable goods, a key indicator of future economic growth, dropped more than expected last month in a bad sign for the strength of the vital manufacturing sector.

The Commerce Department said Monday that orders were down 7.3 percent in July from the previous month, the first drop since March and the biggest falloff since August 2012.

Orders had been up a revised 3.9 percent in June. Analysts had projected a 4 percent drop for last month.

Many economists have been projecting that the nation’s economic recovery would pick up steam in the second half of the year. Monday’s data raise doubts about that.

“The growth bulls will have to begin rethinking their second-half acceleration story after the latest durable goods report,” said Steven Ricchiuto, chief economist at Mizuho Securities.

July’s drop was fueled by a sharp decline in orders for civilian aircraft and parts, down 52.3 percent. Orders for computers and related products also posted a major drop, down 19.9 percent in July from the previous month.

Transportation equipment orders can be particularly volatile month to month, driven in large part by business at Boeing Co. The company received just 90 new orders for jetliners in July, down from 287 the previous month.

Excluding transportation, durable goods orders fell 0.6 percent in July after a 0.1 percent increase the previous month.

Orders for nondefense capital goods, excluding aircraft, which is an important sign of business investment, were down 3.3 percent in July, after rising 1.3 percent in June.

Federal Reserve policymakers are closely watching incoming economic data as they consider reducing their stimulus efforts.

Many analysts have said the Fed could begin reducing its $85 billion in monthly bond purchases next month. But the disappointing durable goods report could bolster Fed officials who want to hold off on tapering those purchases by the central bank.


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