Orders for durable US goods increase
New orders for long-lasting US manufactured goods rose in July, offering hope that the ailing economy could dodge a second recession, even though a gauge of business spending fell.
Durable goods orders jumped 4pc, the Commerce Department said yesterday as demand for autos and airplanes surged, more than erasing June's 1.3pc drop. The rise was double that of economists' expectations.
"This report offers some encouragement that overall manufacturing production may not have fallen entirely out of bed," said Millan Mulraine, a senior macro strategist at TD Securities in New York. "The economy will likely avoid a recession, barring any outside shock."
But non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.5pc after rising 0.6pc. Economists noted this so-called core capital goods category tends to be weak in the first month of a quarter.
Since July, however, stock prices have dropped sharply and consumer confidence has taken a hit, suggesting the report on durable goods -- items from toasters to aircraft meant to last three years or more -- could be offering a rosier view of the economy than warranted.
US stocks rose in choppy trade on the durable goods data, while prices for treasury debt fell. The dollar was marginally weaker against a basket of currencies.
Federal Reserve chairman Ben Bernanke is expected to nod to the stock market turmoil and weak confidence in a speech at an annual central bank conference tomorrow.