Demand for autos pushes durable goods up
Companies ordered more long-lasting manufactured goods from the U.S. during August, which increased demand for cars, trucks, machinery and other metal products. The increase points toward some modest growth in manufacturing output.
Durable goods, which are items expected to last a minimum of three years, increased 0.1 percent during August, according to the Commerce Department. That new figure comes after orders fell 8.1 percent during July, which was mostly the result of a steep drop of volatile commercial aircraft orders.
The orders during August were held back by a drop in demand for defense aircraft and other military goods. Those reductions could be related to steep government spending cuts that started in March. Excluding defense spending, orders increased 0.5 percent. Auto factories saw a 2.4 percent order increase, which is the largest improvement in more than six months.
Orders for capital goods increased 1.5 percent after having fallen 3.3 percent during July. Core capital goods signify the confidence in the economy and include items such a machinery and computers, which can signify expansion. Durable goods shipments were up 0.9 percent during the month of August, which is significant following two months of declines. The shipment figures are used to help calculate the economic growth.
After experiencing a slump earlier this year, manufacturers are trying to rebound. This slump was when weak growth overseas caused the demand for U.S. goods to stumble. Companies also spent less money on purchasing large equipment, but there are now signs that production in factories across the country could be picking up.
Factories increased output during the month of August. It was the largest increase in eight years, which was driven by a strong month at auto manufacturers. Experts believe it could indicate strong growth during the second half of the year. A survey of purchasing managers indicated that factories expanded during the month of August at their fastest levels in two years, which was pushed by significant increases in new orders.
From the April through June quarter, the economy expanded at a 2.5 percent annual pace. That is an increase of 1.1 from the annual rate of 1.1 percent for the January through March period. Many economists had expected growth to slow down during the July through September period, probably settling at 2 percent or even lower.