Aircraft Demand Boosts Durable Goods Orders

Orders for U.S. durable goods (search) — items meant to last at least three years — posted a larger-than-expected rise in July, boosted by an increase in demand for passenger aircraft, a Commerce Department (search) report on Wednesday showed.

Orders gained 1.7 percent in July, their biggest monthly gain since March. Orders aside from transportation were up a smaller 0.1 percent. June durables orders were revised up, to a 1.1 percent advance from a previously reported 0.9 percent jump.

The July number was well above what Wall Street analysts had been expecting. They had projected a 1.0 percent overall gain.

The data is good news for the U.S. manufacturing sector, which has regained steam in recent months after being hit hard by the 2001 recession. From January 2001 through July, about 2.7 million U.S. factory jobs have been lost.

Recently, however, the job picture has stabilized and output, driven by a boom in worker productivity, has increased. The Federal Reserve (search) said U.S. factories ran at their fastest operating rate — 76.3 percent of full capacity — in more than three years in July.

In the Commerce Department report, overall transportation-related orders rose 5.6 percent, as orders in the volatile civilian aircraft category more than doubled from June's tally, offsetting declines in demand for autos and military aircraft.

But other sectors also showed strength. Orders for primary metals were up 5.8 percent while orders for machinery grew 2.1 percent. Durables orders excluding defense-related goods were up 2.7 percent.

Orders for civilian capital goods aside from aircraft — considered by some as a gauge of business investment in new plants and equipment — were up 0.6 percent after being up 1.4 percent in June.