Orders for U.S. durable goods fell more than forecast in July after three months of increases, indicating manufacturing will be slow to strengthen.
Bookings for goods meant to last at least three years decreased 7.3%, the most since August 2012, after a 3.9% gain in June, the Commerce Department said today in Washington. The median forecast of economists surveyed by Bloomberg called for a 4% drop. Orders waned for aircraft and capital goods such as computers and electrical equipment.
The report shows struggling overseas markets and the effects of federal government spending cuts are lingering and holding back manufacturing, which accounts for about 12% of the economy. Further improvement in the labor market and sustained demand for automobiles and housing would help spur production through the second half of the year.
The data support “our view that the fiscal drag will last longer -- part of the decline was from defense -- and growth will stay moderate,” said Michael Gapen, senior U.S. economist at Barclays Plc in New York. “We are in a highly uncertain environment.”
Stock-index futures were little changed after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September rising less than 0.1% to 1,662.3 at 8:55 a.m. in New York.
Orders excluding transportation equipment, which is volatile month to month, declined 0.6% after a 0.1% gain in June that was previously estimated as a 0.1% decrease.
Forecasts for all durable goods orders in the Bloomberg survey of 77 economists ranged from a drop of 8.2% to a 3% advance.
Today’s figures showed bookings for commercial aircraft decreased 52.3% after climbing 33.8% in June. Chicago-based Boeing Co. said it received 90 aircraft orders in July, down from 287 the previous month.
Orders for military equipment decreased 21.7% last month after a 28.7% jump in June. Demand excluding defense hardware fell 6.7% in July.
Demand for non-defense capital goods excluding aircraft, a proxy for future business investment in computers, electronics and other equipment, dropped 3.3% in July, the biggest decrease in five months, after rising 1.3% in the prior month.
Shipments of those products, a measure used in calculating gross domestic product, declined 1.5% after falling 0.8% in June. The value of capital goods sales in July was $65 billion, compared with an average of $65.9 billion in the second quarter, indicating business investment was gaining little traction at the start of the third quarter.