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The Economic Indicator That Shows 'Little Momentum


WASHINGTON (TheBlaze/AP) -- Orders for long-lasting U.S. factory goods fell 7.3 percent in July as demand for commercial aircraft plummeted and businesses spent less on computers and electrical equipment, the Commerce Department said Monday.

The Commerce Department reports on business orders for durable goods in July, on Monday, Aug. 26, 2013. (AP Photo)

The decline, the first in four months, suggests that the U.S. economy entered the third quarter with “little momentum,” as MarketWatch puts it.

“The manufacturing outlook remains just a shade above mediocre and waiting for something to stir it from its torpor,” said Michael Montgomery, U.S. economist at IHS Global Insight.

July’s numbers are the steepest drop in nearly a year.

Core capital goods, which are considered a good measure of businesses' confidence in the economy, fell 3.3 percent. But the drop followed four straight months of gains. Core capital goods include items that point to expansion -- such as machinery, computers and heavy trucks -- while excluding volatile orders for aircraft and defense.

Meanwhile, shipments of core capital goods, a category used to calculate quarterly economic growth, declined 1.5 percent in July, MarketWatch reports.

But excluding the volatile transportation category, orders fell just 0.6 percent. Also, orders for autos and auto parts rose 0.5 percent, the second straight gain. Auto sales jumped 14 percent in July compared with a year earlier.

Still, the big drop suggests the third quarter is off to a weaker start than some had hoped.

While economists cautioned that it's just one month of data, a few lowered their growth estimates for the July-September quarter after seeing the durable goods report. Economists at Barclays Capital now predict third-quarter growth at an annual rate of 1.9 percent, down from their previous forecast of 2.1 percent.

Manufacturing has slumped this year, hurt by weakness overseas that has dragged on U.S. exports. If manufacturing continues to struggle and the numbers show little improvement, it will stifle economic growth in the July-September quarter.

Markets weren’t exactly thrilled with the news:

And here’s a copy of the Commerce Department report:

Follow Becket Adams (@BecketAdams) on Twitter



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