Business orders in the United States for long-lasting manufactured goods shot up by the largest amount on record in July.
But most of the strength came from demand for commercial aircraft, which tends to fluctuate sharply from month to month. Outside of transportation, orders dipped.
Despite the broader weakness in July, most analysts said factory output will likely support solid economic growth in the second half of this year as companies increase their orders for the equipment they need to meet rising demand.
Paul Dales, senior US economist at Capital Economics, noted that some manufacturers are starting to run out of production capacity and that loans to businesses are up sharply.
"We suspect that investment will prove to be one of the economy's bright spots in the second half of this year," Dales wrote in a research note.
Orders for durable goods in July rose 22.6 per cent on a seasonally adjusted basis, the Commerce Department said Tuesday. The strength came from a 318 per cent increase in orders for civilian aircraft, which helped lift orders for transportation equipment by a record 74.2 per cent.
Excluding transportation, orders fell 0.8 per cent. And a key category that serves as a proxy for business investment plans dropped 0.5 per cent. Still, that followed a sizable 5.4 per cent rise in the previous month.
After going into reverse during the first three months of the year, mainly because of the severe winter, the US economy rebounded in the April-June quarter: It grew at a solid annual rate of 4 per cent as measured by the gross domestic product, the economy's total output of goods and services.
Factory output rose for the sixth consecutive month in July, increasing by 1 per cent, led by a jump in production of motor vehicles, furniture, textiles and metals.
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