(Bloomberg) -- Orders placed with U.S. factories for business equipment increased in June for a third straight month, a sign of investment momentum heading into the second half despite corporate concerns over tariffs, Commerce Department figures showed Thursday.
Highlights of Durable Goods (June) |
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Key Takeaways
The miss in durable-goods orders may reflect quirks in data on bookings for aircraft and parts, typically a volatile category, which for civilian equipment rose 4.3 percent after an 11.6 percent drop in May, according to the report. Defense aircraft and parts orders advanced 20.2 percent following a 36.1 percent gain.
Boeing Co. previously said that the planemaker received 233 orders in June, up from 43 in May. Ian Shepherdson of Pantheon Macroeconomics said that a significant portion of the orders were from Boeing's financing arm, which would be excluded from the Commerce Department numbers. In addition, figures for the categories showed much bigger increases in June before seasonal adjustments.
The gain in business-equipment orders included increases in computers and electronic products, along with electrical equipment, appliances and components. Machinery and fabricated-metal products also showed smaller pickups, while orders for primary metals declined for a second month.
The latest data signal business investment remains firm even as President Donald Trump widens a global trade war beyond steel and aluminum and into a growing range of products from China, as well as potential levies on autos.
Business spending, which is getting a boost from lower corporate taxes, is one of the factors supporting a projected pickup in second-quarter economic growth. The GDP report is due Friday from the Commerce Department.
At the same time, the uncertainty over trade policy may spur some companies to slow investment, resulting in a hit to economic growth in the second half or later. Companies including General Motors are citing higher prices for steel and aluminum - - the metals subject to import levies -- as impacting their business.
After the report on durable-goods orders, along with data showing a wider merchandise-trade deficit in June and weaker-than-expected inventories, several estimates of second-quarter GDP growth declined. JPMorgan Chase & Co. cut its projection to 3.9 percent from 4.4 percent, while the Federal Reserve Bank of Atlanta's GDPNow tracker fell to 3.8 percent from 4.4 percent. The median estimate in Bloomberg's survey remained at 4.2 percent.
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--With assistance from Jordan Yadoo and Randall Woods. To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net To contact the editor responsible for this story: Scott Lanman at slanman@bloomberg.net ©2018 Bloomberg L.P. Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit. News for You
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