New orders for US-made goods rebounded in June, recording their biggest increase in eight months, but manufacturing is expected to continue to grow at a moderate pace as the boost from the energy sector fades.
Factory goods orders jumped 3.0 per cent, the Commerce Department said on Thursday. That was the largest gain since October 2016 and followed two straight monthly declines. May's data was revised to show orders falling 0.3 per cent instead of the previously reported 0.8 per cent drop.
Economists had forecast that factory orders would surge 2.9 per cent in June. Manufacturing, which makes up about 12 per cent of the US economy, has been buoyed by a surge in oil and gas drilling.
But the energy stimulus is easing as ample supplies restrain crude oil prices. At the same time, motor vehicle production is declining as the industry struggles with falling sales, which have created an inventory glut.
Motor vehicle production has decreased for three straight quarters. General Motors Co and Ford Motor Co have both announced they will cut production in the second half of this year. US auto sales fell 6.1 per cent in July from a year ago to a seasonally adjusted rate of 16.73 million units.
Thursday's report from the Commerce Department also showed orders for non-defense capital goods excluding aircraft — seen as a measure of business spending plans — were unchanged in June instead of slipping 0.1 per cent as reported last month. Orders for these so-called core capital goods rose 0.8 per cent in May.
Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, edged up 0.1 per cent instead of the previously reported 0.2 per cent gain.
In June, orders for machinery increased 0.4 per cent after advancing 2.6 per cent in May. Mining, oil field and gas field machinery orders increased 3.8 per cent after accelerating 10.3 per cent in May.
Orders for transportation equipment jumped 19.0 per cent, the biggest rise since July 2014, reflecting a 131.1 per cent surge in civilian aircraft orders. Motor vehicle orders nudged up 0.1 per cent after rising 0.3 per cent in May.
Unfilled orders at factories increased 1.3 per cent in June, the largest gain since July 2014. Manufacturing inventories rose 0.2 per cent while shipments fell 0.2 per cent. The inventories-to-shipments ratio rose to 1.38 from 1.37 in May.
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