The U.S. Commerce Department reported on Friday that June Durable goods orders (which refers to items designed to last for several years) increased $1.6 billion or 0.8 percent to $215.4 billion, from a revised 0.1 percent in May. This was the second consecutive monthly increase.
Excluding transportation products – which declined 2.6 percent as high oil prices caused problems for that portion of the economy, new orders increased 2.0%, beating the analysts consensus of a 0.2% drop.
Shipments of manufactured durable goods were also up, increasing $1.1 billion or 0.5 percent to $212.2 billion. This followed a 1.2 percent May decrease. Strength in orders was widespread in June, primarily in metals and machinery. Heavy machinery orders were up 2.3 percent after falling 3.7 percent in May while orders for metals surged by more than 5 percent.
Unfilled orders have remained up in the last twenty-eight months, rising to $7.2 billion or 0.9 percent to $817.6 billion, followed by inventories of manufactured durable goods which have increased eleven months straight to $1.8 billion or 0.5 percent to $332.2 billion.
The report also suggested that the manufacturing sector has been helped by the strength of military goods and export sales. Defense new orders for capital goods in June increased $1.5 billion or 15.8 percent to $11.3 billion while Nondefense new orders decreased $2.3 billion or 3.2 percent to $71.4 billion.
With orders for big-ticket items rising last month and clearly underlining the healthy trend in business investment which will sustain growth in productivity, the pretension of a current recessionary economy as an argument – gains everyday less and less credibility.
In another report today, newly constructed U.S. single-family homes sales came in stronger than expected in June as inventories shrank to three-and-a-half year low. New homes sold at an annual rate of 530,000 in June, well ahead of the consensus expected 503,000 pace. The inventory of homes available for sale dropped 5.3 percent to 425,000, the lowest since December 2004. Total new home inventory peaked at 570,000 in 2006.
The median sales price of new homes rose to $230,900 in June from $227,700 from May while the average price of new homes sold was $298,600.
While there will be more complications down the road for the housing sector, today’s report of the pace of new home sales – suggests, that we are approaching if not have already hit the bottom.