August orders for durable goods, or long-lasting U.S. manufactured goods posted their biggest drop on record, the Commerce Department reported Thursday. It wasn’t all bad news, as a rebound in business spending plans may show some underlying strength in the manufacturing sector.
The Commerce Department said durable goods orders, which include products ranging from toasters to aircraft that are designed to last consumers three years or more, dropped 18.2 percent. It was the largest drop since the measurement began being tracked in 1992. The new report largely erased July’s 22.5 percent surge, which was almost solely aircraft-driven.
Economists polled by Reuters had forecast durable goods orders would decline 18 percent last month.
Orders made for the transportation category, a volatile category, plummeted 42.0 percent last month due to civilian aircraft orders tumbling by 74.3 percent. Boeing reported on its website that it had received 107 orders last month, just a third of July’s unusually large gains.
Orders for automobiles decreased 6.4 percent after rising 10.0 percent the prior month.
Wall Street is hoping that the underlying trends in new orders points to further gains in the months ahead. A separate survey released early this month showed new orders jumped to a near 10-1/2-year high in August and businesses increased capital spending, but it remains unclear whether the index was simply off the mark.
Manufacturing, a staple of the U.S. economy and driver of middle class jobs, is being artificially propped up by firming domestic demand, which for now is offsetting fundamental weaknesses at home and abroad.
