IPP&T Magazine Online

Big ticket manufacturing orders rise 7.3% in June

July 28, 2020   Don Horne




Orders for big-ticket manufactured goods rose a solid 7.3 per cent in June, the second big monthly gain as manufacturing tries to climb out of a spring slump triggered by the coronavirus pandemic.

The Commerce Department told Associated Press Monday that the June gain in durable goods orders, which was better than expected, followed an even bigger 15.1 per cent increase in May. Those two increases came after sharp declines in March and April as factories shut down.

A closely watched gauge of business investment posted a strong 3.3 per cent increase in June after a 1.6 per cent rise in May.

Even as factories come back to life, economists caution that manufacturing could slump again if surging cases in many parts of the country derail a broader economic rebound.

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“The sugar rush from re-openings has now faded and a resurgence of domestic coronavirus cases, alongside very weak demand, supply chain disruptions… and high levels of uncertainty will weigh heavily on business investment,” Oren Klachkin, the lead U.S. economist at Oxford Economics, told Associated Press. “Risks to the recovery will remain heavily tilted to the downside so long as the health situation does not improve.”

The June increase was led by a 20 per cent gain in the transportation sector as orders for cars, trucks and parts surged 85.7 per cent. That figure captures the resumption of production by big automakers. Vehicle sales offset a big decline in orders for commercial aircraft as major airlines, operating at vastly reduced capacity, cancel orders for new planes from Boeing in waves.

Excluding the volatile transportation sector, orders for durable goods, items expected to last at least three years, rose 3.3 per cent, following a 3.6 per cent gain in May.

(Associated Press)


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