U.S. orders for durable goods rose 11.2% in July compared to June, led by strong automobile demand, according to Census Bureau data. This uptick further bolsters the belief that manufacturing activity will help lead the U.S. economic recovery.
Orders for motor vehicles and parts jumped 21.9% in July, following an 85.6% increase in June. Core capital goods orders, a category of durable goods that excludes aircraft and military hardware and is considered a barometer of business investment, rose 1.9%, on the heels of a 4.3% increase in June, and is now close to pre-crisis levels.
The third straight monthly increase in durable goods orders follows recent data from IHS Markit (Flash U.S. Manufacturing Purchasing Managers’ Index) which also noted quicker expansions in output and new orders. Both surveys suggest the manufacturing sector is rapidly recovering from the pandemic lows we experienced in April, though it is important to point out that orders remain below pre-pandemic levels.
Overview of U.S. durable goods orders
Data on orders of durable goods, released on a monthly basis by the United States Census Bureau, measures the cost of orders received by manufacturers for durable goods planned to last for three years or more, such as motor vehicles, household goods or medical equipment. As those durable products often involve large investments across large supply chains, they can be very reflective of the U.S. economic situation.
