Durable-Goods Orders Rise for Fourth Straight Month -- Update
September 25 2020 - 12:01PM
Dow Jones News
By Amara Omeokwe
Orders for long-lasting factory goods increased for the fourth
consecutive month in August, a sign of the manufacturing industry's
continued recovery from coronavirus pandemic-related
disruptions.
New orders for durable goods -- products designed to last at
least three years -- rose 0.4% in August compared with July, the
Commerce Department said Friday. The August increase was at a
slower pace than earlier in the summer, when orders rebounded
following a collapse in demand from early in the pandemic.
A closely watched proxy for business investment -- new orders
for nondefense capital goods excluding aircraft -- also rose last
month, increasing by 1.8%.
Orders for computers, communications equipment and machinery all
rose solidly in August, helping drive the overall gain.
Andrew Hunter, senior U.S. economist at Capital Economics, said
the report showed that "business equipment investment staged a
V-shaped rebound in the third quarter." A V-shaped recovery is a
sharp and quick economic recovery after a steep decline.
Weakness in motor-vehicle, commercial-aircraft and defense
orders weighed on overall gains.
Cancellations of orders for Boeing Co.'s 737 MAX and other
jetliners, as well as General Electric Co. and Pratt & Whitney
engines, boosted the net loss of the industrywide aircraft and
parts business above $27 billion this year through August,
according to Friday's report.
The pace of durable-goods orders can signal demand for
manufactured products and the volume of forthcoming factory
production. Following steep declines in March and April, orders
jumped sharply in May, June and July as the economy reopened from
coronavirus-related shutdowns.
Recent indicators have suggested the manufacturing industry is
bouncing back from disruptions. Surveys from data providers IHS
Markit and the Institute for Supply Management, for example, showed
factory activity grew in August, with gains in output and
improvements in employment levels. A preliminary measure of
manufacturing activity in September also accelerated, according to
IHS Markit.
Still, the slowdown in gains for durable-goods orders follows
other data that have indicated the overall economic recovery
remains choppy. Applications for unemployment benefits, for
example, have hovered around 900,000 a week during September, a
sign of constrained hiring.
For durable-goods orders, "momentum has slowed since the strong
bounce from reopenings but the signal from the core orders and
shipments is still positive," said Rubeela Farooqi, chief U.S.
economist at High Frequency Economics, in a note to clients. "The
manufacturing sector is continuing to recover from low levels."
Doug Cameron contributed to this article.
Write to Amara Omeokwe at amara.omeokwe@wsj.com
(END) Dow Jones Newswires
September 25, 2020 11:46 ET (15:46 GMT)
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