By: Joseph Bonney at jbonney@joc.com.

Largest drop in orders since August 2009
Orders to U.S. factories for big-ticket manufactured goods dropped 1 percent last month, the second straight monthly decline and the largest drop since August 2009, the Commerce Department said.

Excluding the volatile defense and aircraft categories, however, capital equipment orders rose 0.6 percent in June, after a 4.6 percent jump in May. These orders rose at a 25.1 percent annualized rate in the second quarter, up from 15.1 pecent in the first quarter, and are now more than halfway back to their previous peak.

Orders for durable goods – items expected to last three or more years – are closely watched as a barometer of the overall economy and of transportation volume. Higher volume and tight capacity have pushed transportation rates higher this year, although spot rates for containerized import shipments from Asia have leveled off in recent weeks.

Manufacturing has helped drive growth during the early stages of the recovery. A slowdown in orders could be a sign that the recovery is losing strength.

Inventories of manufactured durable goods increased 0.9 percent in June after an 1.1 percent increase in May and have risen for six straight months.

June's overall durable goods orders of $190.5 billion were 16.5 percent higher than the seasonally adjusted $176 billion in orders from a year ago, when the economic recovery had yet to take hold. But they were below the pre-recession peak of $229.5 billion in July 2007.

The commercial aircraft figures that produced last month’s drop in overall orders are open to interpretation. Boeing, the largest U.S. manufacturer of planes, booked orders for 49 airplanes last month after only five orders in May and 34 in April, according to the company's website, but the Commerce Department numbers were seasonally adjusted to reflect what’s normally a high level of orders during the summer months.

Source: The Journal of Commerce

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